40 Pesky Pet Foods Ltd is seeking to reduce costs by shortening its cash conversion cycle. Currently, inventory is held for an average of 80 days, accounts receivable are collected 60 days after sales, and accounts payable are paid 35 days after purchases.

a Calculate the length in days of the current cash conversion cycle.

b What would be the length of the cash conversion cycle if the average age of inventory decreased by 10 days, the average collection period decreased by 15 days, and the average payment period increased by 5 days?

c Why is it that drastic reductions in the cash conversion cycle may result in lost sales?