Question
Yum Inc. has annual sales of $80,000,000 and cost of the good sold $50,000,000; its average inventory is $20,000,000; and its average accounts receivable is
Yum Inc. has annual sales of $80,000,000 and cost of the good sold $50,000,000; its average inventory is $20,000,000; and its average accounts receivable is $16,000,000. The firm buys all raw materials on terms of net 35 days, and it pays on time. The firm is searching for ways to shorten the cash conversion cycle. If sales can be maintained at existing levels while lowering inventory by $3,000,000 and lowering accounts receivable by $2,000,000, by how many days would the cash conversion cycle be changed, assuming payable deferral is unchanged? Use a 365-day year.
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