Use the financial statements supplied on the next page for International Motor Corporation (IMC) to answer the following questions.

a. Calculate the cash conversion cycle for IMC for both 2015 and 2016. What change has occurred, if any? All else being equal, how does this change affect IMC’s need for cash?

b. IMC’s suppliers offer terms of Net 30. Does it appear that IMC is doing a good job of managing its accounts payable?

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Sales Cost of goods sold Gross profit INTERNATIONAL MOTOR CORPORATION Income Statement (in $ million) for the Years Ending December 31 Selling and general and administrative expenses Operating profit Interest expense Earnings before tax Taxes Earnings after tax 2015 $ 60,000 52,000 $ 8,000 6,000 $ 2,000 1,400 600 300 300 $ CA 2016 $ 75,000 61,000 $ 14,000 8,000 6,000 1,300 4,700 2,350 $ 2,350 $ $