How much cash will be freed up


Problem:

Please help with the following finance-related problem. Please provide the answers in an Excel spreadsheet.

Williams & Sons last year reported sales of $10 million and an inventory turnover ratio of 2. The company is now adopting a new inventory system. If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 5 while maintaining the same level of sales, how much cash will be freed up?

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Finance Basics: How much cash will be freed up
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