Parmorramore corp has 12$ million of sales, 3$ million of inventories, 2$ million of recviables, aand...

Parmorramore corp has 12$ million of sales, 3$ million of inventories, 2$ million of recviables, aand 2.5$ million of payables. Its cost of goods sold is 80% of sales, and it finances working capital with bank loans at 7% rate. Assume 365 days in year fo calculations. 1. What is parramores cash conversion cycle? 2. If parramore could lower its inventoires and reciables by 11% each and increase its payables by 11% all wihtout affecting sales or cogs what would be the new CCC? 3. How much cash would be freed up if parramore could lower its inventories and reciables by 11% and increase paybles by 11%? 4. by how much pretax profits change if parramore could lower its inventories and reciavbles by 11% each and increase its payabes by 11%?

Expert Solution

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Parramore Corp has $12 million of sales, $2 million of inventories, $3 million of receivables, and...

Parramore Corp has $12 million of sales, $2 million of inventories, $3 million of receivables, and $3 million of payables. Its cost of goods sold is 80% of sales, and it finances working capital with bank loans at an 6% rate. Assume 365 days in year for your calculations. Do not round intermediate steps. What is Parramore's cash conversion cycle (CCC)? Do not round intermediate calculations. Round your answer to two decimal places. days If Parramore could lower its inventories...

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