Post Company's net sales in 20Y1 were $10,000,000, and its cash cost of goods sold was $5,500,000. Also in 20Y1, its accounts receivable days on hand were 38 days and its inventory days on hand were 62 days. The company projects its 20Y2 net sales will be $11,000,000 and its cash cost of goods sold will be $6,100,000. It is projecting that its accounts receivable days on hand will be 34 days and its inventory days on hand will be 65 days.
How would the shortening of accounts receivable days on hand impact Post Company's cash flow?
- Cash flow would increase by approximately $120,000.
- Cash flow would increase by approximately $140,000.
- Cash flow would increase by approximately $160,000.
- Cash flow would increase by approximately $170,000.