In Problem 10, we assumed the current asset and liability accounts decrease proportionately with Genatron’s sales. This is probably unrealistic following a decline in sales. What will be the impact on the working capital accounts if its collection period lengthens by five days, its inventory period lengthens by seven days, and its payment period lengthens by three days, if Genatron’s sales and COGS fall 5 percent from their 2017 levels?

In Problem

With concerns of increased competition, Genatron is planning in case its 2018 sales fall by 5 percent from their 2017 levels. If cost of goods sold and the current asset and liability accounts decrease proportionately, calculate the following:

a. The 2018 cash conversion cycle.

b. The 2018 net investment in working capital.