Use the financial statements supplied below and on the next page for International Motor Corporation (IMC) to answer the following questions (see MyFinanceLab for the data in Excel format):

a. Calculate the cash conversion cycle for IMC for both 2009 and 2010. 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 accountspayable?

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International Motor Corporation Income Statement (in millions) for the Years Ending December 31 2009 $60,000 2010 $75,000 61,000 $ 14,000 8,000 $ 6,000 1,300 $4700 Sales Gross profit Operating profft Eamings before taxes Eamings after taxes Cost of goods sold Selling, general, and administrative expenses Interest expense Taxes S 8,000 6,000 $ 2,000 1,400 $ 600 300 S 300 S2,350 International Motor Corporation Balance Sheet (in millions) as of December 31 2009 2010 2009 2010 Assets Cash Accounts Receivable Liabilities $3,600 4,600 1,180 1,250 5,600 6,211 $3,080 6,100 Accounts payable Notes payable 2800 6,900 Accruals 6,200 6,600 Total current inventory Total current assets Net plant, property, and equipment $12,019,600 abilities Long-term debt Total liabilities $10,380 $12,061 S6,500 7,000 $16,880 $19,061 Total assets $35,167 $39,698 Equity Common stock Retained earnings Total equity 2,735 2,735 $15,552 $17,902 $18,287 $20,637 Total liabilities and equity $35,167 $39,698