Question
Whitson Co. is looking for ways to shorten its cash conversion cycle. It has annual sales of R36,500,000, or R100,000 a day on a 365-day
Whitson Co. is looking for ways to shorten its cash conversion cycle. It has annual sales of R36,500,000, or R100,000 a day on a 365-day basis. The firm's cost of goods sold is 78% of sales. On average, the company has R9464007in inventory and R7410874in accounts receivable. Its CFO has proposed new policies that would result in a 23% reduction in both average inventories and accounts receivable. She also anticipates that these policies would reduce sales by 11%, while the payables deferral period would remain unchanged at 31days. All sales are on credit.
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