Exercise 1) - Procurement impact on economic performance

Consider the following data:

Income statement:

Purchases: 1,000

EBIT: 280

No other costs

Balance Sheet:

Total Assets: 2,000

Inventory: 700

Question: How much ROA changes by reducing 5% cost of purchases?

Exercise 2) - Procurement impact on financial performance

Consider the following situation:

A supermarket buys shampoo from a supplier and keeps it on the shelf about one week before the customer buys it

Customers pay cash or via credit card, so the average payment time from customers is two weeks

The supermarket pays suppliers eight weeks after the purchase

Question: What is the value of the C2C (or Cash-to-Cash or Cash-Generation-Cycle)?