eBook Problem Walk$-$Through

Parramore Corp has $$13$ million of sales, $$3$ million of inventories, $$3$ million of receivables, and $$2$ million of payables. Its cost of goods sold is $65\%$ of sales, and it finances working capital with bank loans at a $9\%$ rate. Assume $365$ days in year for your calculations.

What is Parramore's cash conversion cycle $($CCC$)?$ Do not round intermediate calculations. Round your answer to two decimal places.

days

If Parramore could lower its inventories and receivables by $10\%$ each and increase its payables by $10\%,$ all without affecting sales or cost of goods sold, what would be the new CCC$?$ Do not round intermediate calculations. Round your answer to two decimal places.

days

How much cash would be freed up$,$ if Parramore could lower its inventories and receivables by $10\%$ each and increase its payables by $10\%,$ all without affecting sales or cost of goods sold? Write out your answer completely. For Example, $13\mathrm{.}2$ million should be entered as $13,200,000.$ Do not round intermediate calculations. Round your answer to the nearest dollar.

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By how much would pretax profits change, if Parramore could lower its inventories and receivables by $10\%$ each and increase its payables by $10\%,$ all without affecting sales or cost of goods sold? Write out your answer completely. For Example, $13\mathrm{.}2$ million should be entered as $13,200,000.$ Do not round intermediate calculations. Round your answer to the nearest dollar.

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