Question
Part D to Strickler Technology is considering changes in its working capital policies to improve its cash flow cycle. Stricklers sales last year were $3,250,000
Part D to Strickler Technology is considering changes in its working capital policies to improve its cash flow cycle. Stricklers sales last year were $3,250,000 (all on credit), and its net profit margin was 7%. Its inventory turnover was 6.0 times during the year, and its DSO was 41 days. Its annual cost of goods sold was $1,800,000. The firm had fixed assets totaling $535,000. Stricklers payables deferral period is 45 days.
Part D: Assume you are the CFO and your accounting officer informs you that the cash conversion cycle can be improved by reducing the average receivables collection period to 25 days. What is your recommendation and explain your reasoning.
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