Bello Corp

question 76

Multiple Choice

Bello Corp.has annual sales of $50,735,000,an average inventory level of $15,012,000,and average accounts receivable of $10,008,000.The company makes all purchases on credit and has always paid on the 30th day.However,it now plans to take full advantage of trade credit and pay its suppliers on the 40th day.The CFO also believes that sales can be maintained at the existing level but inventory can be lowered by $1,946,000 and accounts receivable by $1,946,000.What will be the net change in the cash conversion cycle,assuming a 365-day year?

• A)-14.0 days
• B)-18.8 days
• C)-25.6 days
• D)-38.0 days

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