Multiple Choice
Whitson Co.is looking for ways to shorten its cash conversion cycle.It has annual sales of $36,500,000, or $100,000 a day on a 365-day basis.The firm's cost of goods sold is 75% of sales.On average, the company has $9,000,000 in inventory and $8,000,000 in accounts receivable.Its CFO has proposed new policies that would result in a 20% reduction in both average inventories and accounts receivable.She also anticipates that these policies would reduce sales by 10%, while the payables deferral period would remain unchanged at 35 days.What effect would these policies have on the company's cash conversion cycle? Round to the nearest whole day.
A) −26 days
B) −22 days
C) −18 days
D) −14 days
E) −11 days
Correct Answer:
Verified
Correct Answer:
Verified
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