Graded Assignment 1: Financial Impact of SC Decisions

For all questions in this assignment, consider the 2016 Income Statement and Balance Sheet from SmallCo below.

SmallCo hopes to roll out an inventory reduction program in 2017. The company expects to reduce its inventories by 1200 dollars. There has been some concerns that this may affect sales negatively.

If sales were to reduce by 2900 dollars while inventories are reduced by 1200 dollars, how would working capital turnover be affected? Assume all other numbers are the same in 2017 as in the 2016 reports.

After the inventory reduction project, what would be the cash-to-cash cycle?

Assume the COGS, Accounts Receivable, and Accounts Payable in 2017 remain the same as 2016. Answer in full days.