Ferson Inc

Multiple Choice

Ferson Inc.has annual sales of $36,500,000,or $100,000 a day on a 365-day basis.On average,the company has $12,000,000 in inventory and $8,000,000 in accounts receivable.The firm is looking for ways to shorten its cash conversion cycle,which is calculated on a 365-day basis.Its CFO has proposed new policies that would result in a 20% reduction in both average inventories and accounts receivables.She also anticipates that these policies would reduce sales by 10%,while accounts payable would remain unchanged.What effect would these policies have on the company's cash conversion cycle? Round to the nearest whole day.

A) -40 days
B) -22 days
C) +22 days
D) +40 days