A firm is considering several policy changes to increase sales. It will increase

Question

A firm is considering several policy changes to increase sales. It will increase the variety of gods it keeps in inventory, but this will increase inventory by $25,000. It will offer more liberal sales terms, but this will esult in average receivables increasing to $80,000. These actions are expected to increase sales to $950,000 per year, and cost of goods will remain at 70% of sales. Because of the firm's increased purchases for its own production needs, average payables will increase to $50,000. What effect will these changes have on the firm's cash conversion cycle? (use 365 days in a year. Do not round intermediate calculatiosn. Round your answer to 2 decimal places.) The cash conversion cyclewill increase or decrease by __________?

Explanation / Answer

it will increase by $ 38,000

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