In: Finance
Cash conversion cycle
Primrose Corp has $14 million of sales, $1 million of inventories, $2 million of receivables, and $1 million of payables. Its cost of goods sold is 65% of sales, and it finances working capital with bank loans at an 8% rate. Assume 365 days in year for your calculations. Do not round intermediate steps.
What is Primrose's cash conversion cycle (CCC)? Round your
answer to two decimal places.
________ days
If Primrose 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?
Round your answer to two decimal places.
________ days
How much cash would be freed-up? Round your answer to the
nearest cent.
$ ________
By how much would pre-tax profits change? Round your answer to
the nearest cent.
$ ________