Question: HAMMER industries is concerned about managing cash efficiently. On average, inventories have an age of 70 days and accounts receivable are collected in 50 days.

HAMMER industries is concerned about managing cash efficiently. On average, inventories have an age of 70 days and accounts receivable are collected in 50 days. Accounts payable are paid approximately 30 days after they arise. The company has annual sales of about $25 million. Assume there is no difference in investment per dollar in inventory, receivables and payables; and a 365-day year

What is the companys cash conversion cycle?

Calculate HAMMER working capital requirement based on sales of $25 million

Discuss how HAMMER can reduce working capital requirement based on its current sales figures.

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