Working Capital / Cash conversion cycle
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A new computer system allows your firm to more accurately monitor inventory and anticipate future inventory shortfalls. As a result, the firm feels more able to pare down its inventory levels. What effect will the new system have on working capital and on the cash conversion cycle?
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Solution Summary
The solution explains the impact of a change in inventory on working capital and cash conversion cycle
Solution Preview
Working Capital = Current Assets - Current Liabilities
Cash Conversion Cycle = AR Days + Inventory Days - Payable Days
Due to the new system, ...
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