CASH CONVERSION CYCLE Parramore Corp has $12 million of sales, $3 million of inventories, $2 million of...

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CASH CONVERSION CYCLE
Parramore Corp has $12 million of sales, $3 million ofinventories, $2 million of receivables, and $1 million of payables.Its cost of goods sold is 80% of sales, and it finances workingcapital with bank loans at an 9% rate. Assume 365 days in year foryour calculations. Do not round intermediate steps.
What is Parramore's cash conversion cycle (CCC)? Do not roundintermediate calculations. Round your answer to two decimalplaces.
days

If Parramore could lower its inventories andreceivables by 11% each and increase its payables by 11%, allwithout affecting sales or cost of goods sold, what would be thenew CCC? Do not round intermediate calculations. Round your answerto two decimal places.
days

How much cash would be freed up, if Parramore couldlower its inventories and receivables by 11% each andincrease its payables by 11%, all without affecting sales or costof goods sold? Do not round intermediate calculations. Round youranswer to the nearest cent. Write out your answer completely. ForExample, 13.2 million should be entered as 13,200,000.
$

By how much would pretax profits change, if Parramore couldlower its inventories and receivables by 11% each andincrease its payables by 11%, all without affecting sales or costof goods sold? Do not round intermediate calculations. Round youranswer to the nearest cent. Write out your answer completely. ForExample, 13.2 million should be entered as 13,200,000.
$

Answer & Explanation Solved by verified expert

3.8 Ratings (750 Votes)

Part a CCC 13688 days Formula Formula Sales S 12000000 ICOGSn Inventory conversion period Ip 11406 Inventories I 3000000 RSn Receivables conversion period Rp 6083 Receivables R 2000000 PCOGSn Payables conversion period Pp 3802 Payables 1000000 Ip Rp Pp Cash Conversion Cycle 13688 80S COGS 9600000 Days in See Answer

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CASH CONVERSION CYCLEParramore Corp has $12 million of sales, $3 million ofinventories, $2 million of receivables, and $1 million of payables.Its cost of goods sold is 80% of sales, and it finances workingcapital with bank loans at an 9% rate. Assume 365 days in year foryour calculations. Do not round intermediate steps.What is Parramore's cash conversion cycle (CCC)? Do not roundintermediate calculations. Round your answer to two decimalplaces. daysIf Parramore could lower its inventories andreceivables by 11% each and increase its payables by 11%, allwithout affecting sales or cost of goods sold, what would be thenew CCC? Do not round intermediate calculations. Round your answerto two decimal places. daysHow much cash would be freed up, if Parramore couldlower its inventories and receivables by 11% each andincrease its payables by 11%, all without affecting sales or costof goods sold? Do not round intermediate calculations. Round youranswer to the nearest cent. Write out your answer completely. ForExample, 13.2 million should be entered as 13,200,000.$By how much would pretax profits change, if Parramore couldlower its inventories and receivables by 11% each andincrease its payables by 11%, all without affecting sales or costof goods sold? Do not round intermediate calculations. Round youranswer to the nearest cent. Write out your answer completely. ForExample, 13.2 million should be entered as 13,200,000.$