Question
Seashore Salt Co. is considering several policy changes to increase sales. (10 points) lt plans to increase the variety of goods it keeps in inventory,
Seashore Salt Co. is considering several policy changes to increase sales. (10 points)
lt plans to increase the variety of goods it keeps in inventory, but this will increase inventory by $100,000. It will offer more liberal sales terms, but this will result in receivables increasing by $650,000. These actions are forecasted to increase sales by $8 million a year. Cost of goods sold will remain at 80% of sales. Because of the firm's increased purchases for its own production needs, payables will increase by $350,000.
What effect will these changes have on the firm's cash cycle?
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