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Question
Jane has started a gift basket company that specializes in regional products. Several corporations use her baskets for the holidays, to welcome new employees, and for their sales staff to use as gifts for corporate clients. Because she noticed her average collection period from last quarter to this quarter had doubled to 60 days, she then realized the companys days in inventory has increased from 30 to 40 days and the days in payables dropped from 35 to 30 days. After calculating each quarters cash conversion periods, what do the changes indicate?
Answer
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