Reference no: EM132729749

Problem 1: Serendipity Inc. has annual sales of $54,750,000, or $150,000 a day on a 365-day basis. The firm's cost of goods sold is 75% of sales. On average, the company has $13,500,000 in inventory and $12,000,000 in accounts receivable. The firm is looking for ways to shorten its cash conversion cycle. Its CFO has proposed new policies that would result in a 20% reduction in both average inventories and accounts receivable. She also anticipates that these policies would reduce sales by 10%, while the payables deferral period would remain unchanged at 35 days. What effect would these policies have on the company's cash conversion cycle? Round to the nearest whole day.