Cash conversion cycle CCC = AAI + DSO APP

(operating cycle)

What is the impact on cash conversion cycle for each of the below scenarios? Assume all other components stay

a.Cash discounts are made less favorable to customers. For example to answer this question think through will the company AR increase or decrease? What part of the CCC does this change in AR affect? How does that change in DSO (ACP) affect the ending CCC?

b.Supplier cash discounts increase.

c.Increase in cash paying customers.

d.Fewer raw materials purchased.

e.More raw materials are purchased with credit.

f.More finished goods inventory.