In: Finance
You oversee the purchasing department of Best Buy and are concerned about the funding gap in your cash conversion cycle. Which of the following will not reduce the funding gap?
a. |
Increasing the payable period |
b. |
Increasing sales |
c. |
Decreasing receivables collection period |
d. |
Decreasing days inventory |
Cash conversion period = Days in Inventory + days in receivables- days in payables
Hence, decreasing receivables collection period, decreasing inventory days and increasing payables period will lead to improvement in cash conversion cycle
However, increasing sales will not help.
Hence, the answer is b.