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:

The trade receivables and payables were maintained at a constant level throughout the year.
Required:

(a) Explain why Hercules Wholesalers Ltd is concerned about its liquidity position.

(b) Calculate the operating cash cycle for Hercules Wholesalers Ltd based on the information above.

(c) State what steps may be taken to improve the operating cash cycle of the business.

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Income statement for the year ended 31 December last year 000 000 452 Sales revenue Cost of sales Opening inventories Purchases Closing inventories Gross profit Expenses Loss for the year Non-current assets Property, plant and equipment Premises at valuation Fixtures and fittings at cost less depreciation Motor vehicles at cost less depreciation Statement of financial position as at 31 December last year 000 Current assets Inventories Trade receivables 125 341 466 (143) Total assets Equity Ordinary share capital Retained earnings (323) 129 (132) (3) 280 25 52 357 143 163 306 663 100 158