Question: Suppose that last year a firm had a DSO of 35 days and annual revenues equal to 10,000,000$. The treasury department has made it a goal to reduce the DSO to 30 days, while holding constant revenues. If this reduction is realized, then calculate the following:
a. The dollar change in recieviables
b. The implied reduced financing cost of the receivables (Assume a borrowing rate of 2.5%)
c. The change in the OC and CCP given that next year's DIH and DPO are expected to equal 45 days and 75 days, respectively.