How much would the firm pre-tax income have increased

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Soenen Inc. had the following data for 2008 (in millions). The new CFO believes that the company could improve its working capital management sufficiently to bring its NWC and CCC up to the benchmark companies' level without affecting either sales or the costs of goods sold. Soenen finances its net working capital with a bank loan at an 8% annual interest rate, and it uses a 365-day year. If these changes had been made, by how much would the firm's pre-tax income have increased? Original Data Related CCC Benchmarks' CCC Sales $100,000 Cost of goods sold $80,000 Inventory (ICP) $20,000 91.25 38.00 Receivables (DSO) $16,000 58.40 20.00 Payables (PDP) $5,000 22.81 30.00 126.84 28.00

Reference no: EM131346479

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