You oversee the purchasing department of Best Buy and are concerned about the funding gap in...

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

Solutions

Expert Solution

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.

jeff jeffy answered 2 years ago

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