Data on Liu Inc $\quad$ $\quad$ $\quad$

question 133

Multiple Choice

Data on Liu Inc.for the most recent year are shown below,along with the inventory conversion period (ICP) of the firms against which it benchmarks.The firm's new CFO believes that the company could reduce its inventory enough to reduce its ICP to the benchmarks' average.If this were done,by how much would inventories decline? Use a 365-day year. Cost of goods sold = $\quad$$\quad$$\quad$$\quad$$\quad$ $\quad$$\quad$$\quad$ $\quad$$\quad$$\quad$ $\quad$ $\$ 85,000$
Inventory = $\quad$$\quad$$\quad$$\quad$$\quad$ $\quad$$\quad$$\quad$ $\quad$$\quad$$\quad$ $\quad$$\quad$$\quad$$\quad$ $\$ 20,000$
Inventory conversion period $(\mathrm{ICP}) =$ $\quad$$\quad$$\quad$ $\quad$$\quad$$\quad$$\quad$ $85.88$
Benchmark inventory conversion period $(\mathrm{ICP}) =$ $\quad$$\quad$$\quad$ $38.00$

• A) $7,316
• B) $8,129
• C) $9,032
• D) $10,036
• E) $11,151

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Definitions:

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