Conversion cycle-by how much would pre-tax profits change

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Reference no: EM13809247

Cash conversion cycle

Primrose Corp has $19 million of sales, $3 million of inventories, $2 million of receivables, and $3 million of payables. Its cost of goods sold is 70% of sales, and it finances working capital with bank loans at an 7% rate. Assume 365 days in year for your calculations. Round intermediate steps to 2 decimal places.

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 9% each and increase its payables by 9%, 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: EM13809247

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