Your company is planning to cut inventory levels to reduce working capital to $250,000 for next year. You are developing a sensitivity analysis for next year's budget and have arrived at the following scenarios.

Required:
(a) Calculate the inventory reduction required to reduce working capital to $250,000 for each scenario.
(b) For which scenarios does it not seem feasible to cut inventory by the amounts suggested in part (a)?

Transcribed Image Text:

$125,000 $349,000 $421,000 $300,000 $250,000 $725,000 Cash Accounts receivable 245,000 211,000 153,000 200,000 146,000 600,000 Inventory Accounts payable 310,000 222,000 245,000 130,000 300,000 300,000 350,000 320,000343,000 289,000 280,000 1,200,000