DROP DOWN OPTIONS FOR PART A ARE INCREASED/DECREASED.

Use the financial statements supplied here for the International Motor Corporation (IMC) to answer the following questions: a. Calculate the cash conversion cycle for IMC for both 2015 and 2016. 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 accounts payable? a. Calculate the cash conversion cycle for IMC for both 2015 and 2016. The cash conversion cycle for 2015 is days. (Round to the nearest integer.) The cash conversion cycle for 2016 is days. (Round to the nearest integer.) What change has occurred, if any? All else being equal, how does this change affect IMC's need for cash? (Select from the drop-down menus.) The CCC has by about 19 days, which the amount of cash needed. b. IMC's suppliers offer terms of net 30. Does it appear that IMC is doing a good job of managing its accounts payable? (Select the best choice below.) O A. The firm should be paying after 30 days if there is no penalty, to take advantage of additional cash on hand. O B. The firm is paying when it should be. C. The firm is paying too early; it could be earning interest on its money. D. The firm should be paying within 10 days. - Data table INTERNATIONAL MOTOR CORPORATION Income Statement (in millions) for the years ending December 31 2015 2016 Sales $60,000 $75,000 (-) Cost of goods sold 52,000 61,000 Gross profit $8,000 $14,000 (-) Selling and general and administrative expenses 6,000 8,000 Operating profit $2,000 $6,000 (-) Interest expense 1,400 1,300 Earnings before tax $600 $4,700 (-) Taxes 300 2,350 Earnings after tax $300 $2,350 INTERNATIONAL MOTOR CORPORATION Balance Sheet (in millions) as of December 31 2015 2016 2015 2016 Assets Liabilities Cash $3,080 $6,100 Accounts payable $3,662 $3,875 Accounts receivable 2,924 7,133 Notes payable 1,180 1,250 Inventory 6,066 6,992 Accruals 5,600 6,211 Total current assets $12,070 $20,225 Total current liabilities $10,442 $11,336 Net plant, property, and equip. $23,087 $20,098 Long-term debt $6,500 $7,000 Total assets $35,157 $40,323 Total liabilities $ 16,942 $18,336 Equity Common stock $2,663 $2,635 Retained earnings $15,552 $17,902 Total equity $18,215 $20,537 Total liabilities and equity $35,157 $40,323 Use the financial statements supplied here for the International Motor Corporation (IMC) to answer the following questions: a. Calculate the cash conversion cycle for IMC for both 2015 and 2016. 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 accounts payable? a. Calculate the cash conversion cycle for IMC for both 2015 and 2016. The cash conversion cycle for 2015 is days. (Round to the nearest integer.) The cash conversion cycle for 2016 is days. (Round to the nearest integer.) What change has occurred, if any? All else being equal, how does this change affect IMC's need for cash? (Select from the drop-down menus.) The CCC has by about 19 days, which the amount of cash needed. b. IMC's suppliers offer terms of net 30. Does it appear that IMC is doing a good job of managing its accounts payable? (Select the best choice below.) O A. The firm should be paying after 30 days if there is no penalty, to take advantage of additional cash on hand. O B. The firm is paying when it should be. C. The firm is paying too early; it could be earning interest on its money. D. The firm should be paying within 10 days. - Data table INTERNATIONAL MOTOR CORPORATION Income Statement (in millions) for the years ending December 31 2015 2016 Sales $60,000 $75,000 (-) Cost of goods sold 52,000 61,000 Gross profit $8,000 $14,000 (-) Selling and general and administrative expenses 6,000 8,000 Operating profit $2,000 $6,000 (-) Interest expense 1,400 1,300 Earnings before tax $600 $4,700 (-) Taxes 300 2,350 Earnings after tax $300 $2,350 INTERNATIONAL MOTOR CORPORATION Balance Sheet (in millions) as of December 31 2015 2016 2015 2016 Assets Liabilities Cash $3,080 $6,100 Accounts payable $3,662 $3,875 Accounts receivable 2,924 7,133 Notes payable 1,180 1,250 Inventory 6,066 6,992 Accruals 5,600 6,211 Total current assets $12,070 $20,225 Total current liabilities $10,442 $11,336 Net plant, property, and equip. $23,087 $20,098 Long-term debt $6,500 $7,000 Total assets $35,157 $40,323 Total liabilities $ 16,942 $18,336 Equity Common stock $2,663 $2,635 Retained earnings $15,552 $17,902 Total equity $18,215 $20,537 Total liabilities and equity $35,157 $40,323