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Kiley Corporation had the following data for the most recent year. The new CFO believes that an improved inventory management system could lower the average
Kiley Corporation had the following data for the most recent year. The new CFO believes that an improved inventory management system could lower the average inventory by $4000, that improvements in the credit department could reduce receivables by $2000, and that the purchasing department coudl negogite better credit termsanf thereby increase accounts payable by $2000. Futhermore, she thinks that these changes would not affect either sales or the costs of goods sold. If these changes were made by how many days would tbe cadh conversion cycle be lowered?
Original. Revised
Annual sales: $110000. $110000
unchanged
COGS: unchanged. $80000. $80000
Average inventory: $20000. $16000
lowered by $4000
Average receivables: $16000. $14000
lowered by $2000
Average payables: $10000. $12000
increase by $2000
Days in year. 365. 365
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