Hercules Wholesalers Ltd has been particularly concerned with its liquidity position in recent months. The most recent income statement and statement of financial position of the business are as follows:
Income statement for the year ended 31 December last year

Statement of financial position as at 31 December last year:
ASSETS
Non-current assets
Property, plant and equipment..................................................................357
Current assets
Inventories................................................................................................143
Trade receivables..................................................................................... 163
306
Total Assets..............................................................................................663
EQUITY AND LIABILITIES
Equity
Ordinary Share Capital.............................................................................100
Retained earnings.....................................................................................158
258
Non-current Liabilities
Borrowings-Loan.....................................................................................120
Current Liabilities
Trade Payables..........................................................................................145
Borrowings-Bank Overdraft....................................................................140
285
Total Equity and Liabilities 663
Explain why
Hercules Wholesalers Ltd is concerned about its liquidity position.
Calculate the operating cash cycle for Hercules Wholesalers Ltd.
State what steps may be taken to improve the operating cash cycle of the business.

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Sal es revenue 452 Cost of sales 125 Openi ng inventories 341 Purchases 466 Cl osing inventories 143 323 Gross profit 129 132