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Question
Which of the following actions would be likely to shorten the cash conversion cycle?a. Change the credit terms offered to customers from 3/10 net 30 to 1/10 net 50.
b. Begin to take cash discounts on inventory purchases; the terms are 2/10 net 30.
c. Adopt a new manufacturing process that saves some labor costs but slows down the conversion of raw materials to finished goods from 10 days to 20 days.
d. Change the credit terms offered to customers from 2/10 net 30 to 1/10 net 60.
e. Adopt a new manufacturing process that speeds up the conversion of raw materials to finished goods from 20 days to 10 days.
Answer
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