Consider the operating cycle to answer the following questions.

Operating Cycle

cash-- settle payables -- Account Payable-- purchases -- Buy with payables-- inventories -- sales-- accounts receivable -- returned to cash -- (Again the cycle repeat) --- Cash

1. Why might a company want to reduce its cash conversion cycle? (Hint: Consider the financial statement implications of reducing the cash conversion cycle.)
2. How might a company reduce its cash conversion cycle?
3. Examine and discuss the potential impacts on customers and suppliers of taking the actions