Williams & Sons last year reported sales of $10 million and an inventory turnover ratio of 2. The company is now adopting a new inventory system. If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 5 while maintaining the same level of sales, how much cash will be freed up?© BrainMass Inc. brainmass.com October 10, 2019, 12:54 am ad1c9bdddf
We calculate the inventory levels at the two turnover rates
The solution explains how to calculate the amount of cash freed up due to reduction in inventory.