DOLLAR BILL'S, a retail store in New York City, buys its inventory on credit. Upon purchase, it is given 30 days in which to pay its suppliers. It sells all of its merchandise on credit. It extends 60 days of credit to its customers. Its inventory turnover rate is 60 days.

Situation 1
Using the Cash Conversion Model, measure DOLLAR BILL'S financing cycle in both days and money ($US) using the following assumptions:
• Sales of $730,000
• Gross Margin of 30%
• Financing Rate 61/2%

Situation 2
Recent management decisions have had the following impact:
• DOLLAR BILL has renegotiated its credit line so that it has 35 days to pay its suppliers
• It now extends 45 days of credit to its customers,
• It has an inventory turnover rate of 45 days.
All other factors remain the same. Has DOLLAR BILL’S financing cycle improved or declined? Quantify the change in days and in dollars. Please show your work.

What do YOU think ?
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I have the formulas:

Cash Conversion Cycle (CCC) = DIO + DSO - DPO
where:
DIO = Average Inventory / (Cost of Goods Sold / 365)
DSO = Average Accounts Receivable / (Revenues / 365)
DPO = Average Accounts Payable / (Cost of Goods Sold / 365)
and:
Average Inventory = (Beginning Inventory + Ending Inventory) / 2
Average Accounts Receivable (A/R) = (Beginning A/R + Ending A/R) / 2
Average Accounts Payable (A/P) = (Beginning A/P + Ending A/P) / 2

but I don't know how exactly to use them as that I am not much in english...

Ok, I know the formulas you listed. They are in the textbook, but how do I derive to the COGS, beginning inventory, ending inventory, etc. to calculate the answer.

I am trying to gather that piece of the puzzle.

This is exactly what I need to figure out as well...