Parramore Corp has $15 million of sales, $3 million of
inventories, $4 million of receivables, and $3 million of payables.
Its cost of goods sold is 85% of sales, and it finances working
capital with bank loans at an 7% rate. Assume 365 days in year for
your calculations. Do not round intermediate steps.
- What is Parramore's cash conversion cycle (CCC)? Do not round
intermediate calculations. Round your answer to two decimal
places.
days
- If Parramore could lower its inventories and
receivables by 8% each and increase its payables by 8%, all without
affecting sales or cost of goods sold, what would be the new CCC?
Do not round intermediate calculations. Round your answer to two
decimal places.
days
- How much cash would be freed up, if Parramore could
lower its inventories and receivables by 8% each and
increase its payables by 8%, all without affecting sales or cost of
goods sold? Do not round intermediate calculations. Round your
answer to the nearest cent. Write out your answer completely. For
Example, 13.2 million should be entered as 13,200,000.
$
- By how much would pretax profits change, if Parramore could
lower its inventories and receivables by 8% each and
increase its payables by 8%, all without affecting sales or cost of
goods sold? Do not round intermediate calculations. Round your
answer to the nearest cent. Write out your answer completely. For
Example, 13.2 million should be entered as 13,200,000.
$