Haberdash inc. last year reported sales of $12 million and an inventory turnover ratio of 3. the company is now adopting a just-in-time inventory system. if the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 7.5, while maintaining the same level of sales, how much cash will be freed up?

If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 7.5, while maintaining the same level of sales, the cash that will be freed up is: a. $2,400,000.

A haberdasher is a person who sells small articles for sewing, such as buttons, ribbons and zippers in the United Kingdom. Whereas in the United States, the haberdasher refers instead to a retailer who sells men's clothing, including suits, shirts, and neckties.

Haberdash inc. last year reported sales of $12 million and an inventory turnover ratio of 3. the company is now adopting a just-in-time inventory system.

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Cash freed up = $4,000,000 – $1,600,000 = $2,400,000.

So, If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 7.5, while maintaining the same level of sales, the cash that will be freed up is: a. $2,400,000.

Grade:  9

Subject:  business

Chapter:  sales

Keywords:  

Haberdash, cash, sales, the company, inventory system

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