Which of the following actions should Reece Windows take if it wants to reduce its cash conversion cycle?
A) Take steps to reduce the DSO.
B) Start paying its bills sooner, which would reduce the average accounts payable but not affect sales.
C) Sell common stock to retire long-term bonds.
D) Sell an issue of long-term bonds and use the proceeds to buy back some of its common stock.
E) Increase average inventory without increasing sales.

Question

Quizplus · Accepted Answer

Reece Windows can reduce its cash conversion cycle by taking steps to reduce the DSO (Days Sales Outstanding). This can be achieved by implementing better credit policies, improving collections, and offering incentives for early payment by customers. Lowering the DSO will improve the company's cash flow and reduce the time it takes to convert its receivables into cash. The other options, such as starting to pay bills sooner or increasing inventory without increasing sales, would not necessarily improve the cash conversion cycle, and selling stock or bonds may actually have a negative impact on the company's liquidity.

Which of the Following Actions Should Reece Windows Take If