By how much would pre-tax profits change

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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.

$   ________

Reference no: EM132046280

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