Asked by Shawntay Williams on Jul 08, 2024
Verified
The Lumber Yard has installed a new inventory control system which will improve the efficiency of the operations and reduce excess inventory. This system will _____ the inventory period and _____ the cash cycle.
A) increase; increase
B) increase; decrease
C) decrease; decrease
D) decrease; increase
E) decrease; not effect
Inventory Control System
A system used by businesses to manage their inventory levels, ensuring they have the right products in the right quantity for sale, at the right time.
Inventory Period
The average time it takes for a company to convert its inventory into sales.
- Learn the implications of inventory quantities, accounts receivable, and accounts payable on a company's liquidity and cycle of operations.
- Uncover methodologies to ameliorate the operation and cash conversion cycles.
Verified Answer
RK
Rastko KojovicJul 13, 2024
Final Answer :
C
Explanation :
The new inventory control system will decrease the inventory period by improving efficiency and reducing excess inventory, which in turn will decrease the cash cycle by allowing the company to convert inventory into cash more quickly.
Learning Objectives
- Learn the implications of inventory quantities, accounts receivable, and accounts payable on a company's liquidity and cycle of operations.
- Uncover methodologies to ameliorate the operation and cash conversion cycles.
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