5. Given Robinsons 2016 and 2017 financial information presented in Problems 2 and 4,

a. Compute its operating and cash conversion cycle in each year.

b. What was Robinsons net investment in working capital each year?

problem 2 & 4

2. The Robinson Company has the following current assets and current liabilities for these two years:

2016 2017

Cash and marketable securities $50,000 $50,000

Accounts receivable 300,000 350,000

Inventories 350,000 500,000

Total current assets $700,000 $900,000

Accounts payable $200,000 $250,000

Bank loan 0 150,000

Accruals 150,000 200,000

Total current liabilities $350,000 $600,000

If sales in 2016 were $1.2 million, sales in 2017 were $1.3 million, and cost of goods sold was 70 percent of sales, how long were Robinsons operating cycles and cash conversion cycles in each of these years? What caused them to change during this time?

4. Suppose the Robinson Company had a cost of goods sold of $1,000,000 in 2016 and $1,200,000 in 2017.

a. Calculate the inventory turnover for each year. Comment on your findings.

b. What would have been the amount of inventories in 2017 if the 2016 turnover ratio had been maintained?