Answer:

133.34 + 97.22 138.89 = 91.67

So reduction in NOWC is 470-91.67=378.3

PLEASE EXPLAIN HOW TO GET THIS ANSWER. WILL UPVOTE.

Inventory conversion = inventory/(cogs/365) inventory = inventory conversion*(cogs/365) Ave collection period= ACP= AR/(sales/365) AR = ACP(sales/365) Payable conversion = payables/(sales/365) payables = payable conversion*(COGS/365) Below is information on the current state at the firm: Sales $1,216.7 COGS $1,013.9 Inventories $140.0 Receivables $445.0 Payables $115.0 Days/year 365 Suppose inventory conversion goes from 50.4 to 35 days. It offers early discounts and brings the collection period down from 133.5 to 40 days. It increases it payment terms from 41.5 to 50 days. How does that change the amount of money tied up in NOWC