Case Study: BrightTech Electronics LLC BrightTech Electronics LLC is a rapidly growing mid-sized company in Abu Dhabi that designs and distributes smart home devices. Over the past three years, BrightTech has experienced a 25% annual growth in sales, driven by strong demand for its innovative products. Despite rising revenues, the company has recently faced cash flow challenges due to high production costs, delayed customer payments, and increasing competition. Financial Snapshot (FY2024) Annual Sales: AED 50 million (25% growth expected next year) Cost of Goods Sold (COGS): AED 30 million Accounts Receivable Period: 60 days Inventory Turnover Period: 75 days Accounts Payable Period: 40 days Cash Balance: AED 2.5 million Bank Credit Line: AED 5 million (interest rate 6% per year) The CFO is concerned that as BrightTech grows, the company may face a working capital shortage, making it difficult to finance daily operations without relying heavily on expensive short-term borrowing. Issue 18/08/2025 Revision Date: Ref No. LU-ACAF-ACAFO- FRM.029.01 Assignment Page 3 of 3 Assignment Questions 1. Working Capital Analysis: (10 Marks) Calculate BrightTechs cash conversion cycle (CCC) using the given data. Based on your calculations, assess whether the companys current working capital position is healthy. 2. Financial Planning: (9 Marks) If sales are projected to grow by 25% next year, estimate the additional working capital required to support this growth. Identify the main factors driving the need for extra financing. 3. Strategic Recommendations: (8 Marks) Suggest at least three strategies BrightTech can implement to improve working capital management (e.g., receivables, inventory, or payables). Evaluate the potential risks and benefits of each strategy. 4. Financing Decision: (8 Marks) Should BrightTech rely on its bank credit line, seek long-term financing, or improve internal cash flows to meet its working capital needs? Justify your recommendation using financial reasoning