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St. Thomas University Operations And Supply Chain Management Assignment Help - accounts receivable


Question - Van Den Borsh 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 firm's cost of goods sold is 85% of sales. 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 to 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. W hat will be the net change in the cash conversion cycle,
assuming a 365-day year?

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