Inventory Management

Williams & Sons last year reported sales of $21 million, cost of goods sold (COGS) of $16 and an inventory turnover ratio of 4. The company is now adopting a new inventory system. If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 8 while maintaining the same level of sales and COGS, how much cash will be freed up? Do not round intermediate calculations. Round your answer to the nearest dollar.

COGS/Inventory turnover ratio= $16/4=4

=$16/8=2=$2million freed up