(a) The requirement is to identify the impact of decisions
on the cash conversion cycle. The cash conversion cycle is
equal to the Inventory conversion period + Receivables collection
period – Payables deferral period. Answer (a) is correct
because the impact of a decreased inventory conversion period is
a reduction in the cash conversion cycle. Answers (b), (c), and
(d) are incorrect because these actions would increase the length
of a firm’s cash conversion cycle.