A Firm Is Considering the Following Changes: Increasing Inventory Variety,which

question 89

Essay

A firm is considering the following changes: increasing inventory variety,which will increase inventory to $60,000,and offering more liberal sales terms,which will result in average receivables increasing to $65,000.These actions are expected to increase sales to $800,000 per year,and cost of goods will remain at 75%.Because of the increased purchases,average payables will increase to $35,000.What effect will these changes have on the cash conversion cycle?

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Definitions:

Social Roles

Social Roles are the parts individuals play as members of a social group, which dictate their behavior in specific contexts.

Equal To

A term used to denote that two things have the same value, quantity, or importance.

Four Times

A phrase indicating a quantity or occurrence that is fourfold in number or frequency.

Two Times

Referring to an occurrence or action happening twice or a multiplication by two.