The Furniture Corporation turns over its inventory 7 times a year, has an average collection period of
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The Furniture Corporation turns over its inventory 7 times a year, has an average collection period of 45 days, and has an average payment period of 30 days. It has annual sales of $5 million and cost of goods sold of $1.8 million.
a. What is the firm’s operating cycle and cash conversion cycle?
b. Calculate the dollar value of inventory held by the firm.
c. Suppose the firm could reduce the average age of its inventory from 73 days to 63 days. By how much would it reduce its dollar investment in working capital?
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Related Book For
Principles Of Managerial Finance Brief
ISBN: 9781292267142
8th Global Edition
Authors: Chad J. Zutter, Scott B. Smart
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