### Affect pre-tax profits

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##### Reference no: EM1313154

Calculation of no. of days in conversion cycle.

Primrose Corp has \$15 million of sales, \$2 million of inventories, \$ 3 million of receivables, and \$1 million of payables. Its costs of goods sold are 80% of sales, and it finances working capital with bank loans at an 8% rate. What is Primrose's cash conversion cycle (CCC)? If Primrose could lower  its inventories and receivables by 10% each and increase its payables by 10%, all without affecting either sales or cost of goods sold, what would the new  CCC be, how much cash would be freed up, and how would that affect pre-tax profits ?

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