Jordan Air Inc. has an average inventory of $1,000,000. Its estimated annual sales are 15 million units, and the firm estimates that the receivable collection period is twice the inventory conversion period. The firm pays its commercial loan on time; net maturity 30. The company wants to reduce the cash conversion cycle by 10 days. He believes he can reduce his average inventory to $900,000. Let's assume a 360-day year and sales will not change. Cost of goods sold equals 80 percent of sales. Also, by how much should the firm reduce accounts receivable to meet its 10-day reduction target? Ventura Corp.'s annual sales are $50,735,000.00, average inventory level is $15,012,000.00, and average accounts receivable is $10,000,000.00. The firm's cost of goods sold accounts for 85% of its sales. The company makes all its purchases on credit and is always 30. pays per day. However, he now plans to take full advantage of the commercial loan and make payments to his suppliers on the 40th day. The CFO also believes that sales can be maintained at the current level, but that inventory can be reduced by $1,950,000,000 and accounts receivable by $1,90,000,000. Assuming a 365-day year, what will be the net change in the cash conversion cycle?

Answer rating: 100% (QA)

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