In: Finance
Parramore Corp has $11 million of sales, $3 million of
inventories, $2.25 million of receivables, and...
Parramore Corp has $11 million of sales, $3 million of
inventories, $2.25 million of receivables, and $1.25 million of
payables. Its cost of goods sold is 85% of sales, and it finances
working capital with bank loans at an 8% rate. Assume 365 days in
year for your calculations.
- 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 and
receivables by 12% each and increase its payables by 12%, all
without affecting sales or cost of goods sold, what would be the
new CCC? Do not round intermediate calculations. Round your answer
to two decimal places.
days
- How much cash would be freed up, if Parramore could
lower its inventories and receivables by 12% each and
increase its payables by 12%, all without affecting sales or cost
of goods sold? Write out your answer completely. For Example, 13.2
million should be entered as 13,200,000. Do not round intermediate
calculations. Round your answer to the nearest dollar.
$
- By how much would pretax profits change, if Parramore could
lower its inventories and receivables by 12% each and
increase its payables by 12%, all without affecting sales or cost
of goods sold? Write out your answer completely. For Example, 13.2
million should be entered as 13,200,000. Do not round intermediate
calculations. Round your answer to the nearest dollar.
$