Reference no: EM13927159

The Butler-Huron Company's balance sheet and income statement for last year are as follows:

Balance Sheet (in Millions of   Dollars)

Assets		Liabilities and Equity
Cash and marketable securities	$  103	Accounts payable***	$1,166
Accounts receivable*	1,138	Accrued liabilities
Inventories**	1,827	(salaries and benefits)	536
Other current assets	39	Other  current liabilities	493
Total current assets	$3,107	Total current liabilities	$2,195
Plant and equipment (net)	3,523	Long-term debt and other
Other assets	54	liabilities	2,736
Total assets	$6,684	Common stock	105
		Retained earnings	1,648
		Total stockholders' equity	$1,753
		Total liabilities and equity	$6,684

*Assume that all sales are credit sales and that average accounts receivable are the same as ending accounts  receivable.

**Assume that average inventory over the year was the same as ending  inventory.

***Assume that average accounts payable are the same as ending accounts  payable.

Income Statement (in Millions of Dollars)

Net sales	$13,644
Cost of sales	9,890
Selling, general, and administrative expenses	2,264
Other expenses	812
Total expenses	$12,966
Earnings before taxes	678
Taxes	268
Earnings after taxes (net income)	$    410

a. Determine Butler-Huron's cash conversion cycle.

b. Determine Butler-Huron's cash conversion cycle assuming that 75 percent of annual sales are credit sales (i.e., 25 percent represent cash  sales).

c. Determine Butler-Huron's cash conversion cycle assuming that 50 percent of annual sales are credit sales.