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Q2 The Krusty Krab is currently evaluating its working capital policy. Management thinks it can increase inventory efficiency (inventory turnover ratio) by changing the delivery
Q2 The Krusty Krab is currently evaluating its working capital policy. Management thinks it can increase inventory efficiency (inventory turnover ratio) by changing the delivery schedule of Krabby Patty ingredients. The change should not otherwise impact the restaurant's operations. a Using the information below, compute the change in working capital. $525,000 Sales $420,000 Cost of goods sold (COGS) 12 Target inventory turnover ratio 7 Current inventory turnover ratio b By how much does the Krusty Krab's free cash flow to the firm (FCFF) change? c How are working capital and free cash flow to the firm (FCFF) related? SHOW WORK HERE, HIGHLIGHT FINAL ANSWER IN YELLOW
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