If a firm decided to reduce the receivables period by speeding up its collections from its customers while keeping the inventory period and payables period the same, then the:

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The cash conversion cycle is defined as the time it takes for a firm to convert its resources invested in inventory and receivables into cash. By reducing the receivables period, the firm will be able to collect cash from its customers more quickly, which will decrease the cash conversion cycle. The inventory period and payables period remaining the same does not impact the calculation of the cash conversion cycle. Therefore, option B is correct. Option A is incorrect because if the cash conversion cycle decreases, it means that the firm can release cash into its operations sooner, which is a favorable outcome. Option C is incorrect because the reduction in the receivables period will not minimize the investment in working capital since the firm will still have inventory and payables to manage. Option D is incorrect because a decrease in the cash conversion cycle and increasing net working capital are contradictory.

If a Firm Decided to Reduce the Receivables Period by Speeding