Zervos Inc. had the following data for last year (in millions). The new CFO believes (1) that an improved inventory management system could lower the average inventory by $4,000, (2) that improvements in the credit department could reduce receivables by $2,000, and (3) that the purchasing department could negotiate better credit terms and thereby increase accounts payable by $2,000. Furthermore, she thinks that these changes would not affect either sales or the costs of goods sold. If these changes were made, by how many days would the cash conversion cycle be lowered? Do not round your intermediate calculations. OriginalRevisedAnnual sales: unchanged$117,000$117,000Cost of goods sold: unchanged$80,000$80,000Average inventory: lowered by $4,000$20,000$16,000Average receivables:
lowered by $2,000$16,000$14,000Average payables: increased by $2,000$10,000$12,000Days in year365365?
A. 40.3 days
B. 37.6 days
C. 39.7 days
D. 33.6 days
E. 32.6 days
Answer: D
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