Question
Sun Magic Corp. consistently sells $60 million of product sales (with a cost of goods sold of $40 million) each year. Sun's inventory ratio has
Sun Magic Corp. consistently sells $60 million of product sales (with a cost of goods sold of $40 million) each year. Sun's inventory ratio has been 4.0 for the past few years. A new VP of Operations believes that a new inventory control system will increase inventory turnover to 6.0 without impacting sales. If the new VP is correct, how much working capital will be freed up?
| a. | It cannot be determined from the information provided. | |
| b. | $2.0 million | |
| c. | $6.7 million (rounded). | |
| d. | $3.3 million (rounded) |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Auditing A Business Risk Approach
Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg
8th edition
538476230, 978-0538476232
