The Shoe Tree currently has an operating cycle of 199 days and a cash cycle of 54 days.The company is implementing some changes that will reduce the inventory period by 11 days, decrease the receivables period by 6 days, and decrease the accounts payable period by 4 days.How many days will be in the new cash cycle once all of these changes become effective?

Question

Quizplus · Accepted Answer

The new cash cycle will be 41 days. The inventory period will be reduced by 11 days, the receivables period will be reduced by 6 days, and the accounts payable period will be reduced by 4 days. This will result in a total reduction of 21 days in the cash cycle. The new cash cycle will be 54 days - 21 days = 41 days.

The Shoe Tree Currently Has an Operating Cycle of 199