Use the given information about XYZ Pty Ltd to answer the questions that follow:

Sales P10, 000,000

Average inventories P2, 000,000

Cost of goods sold P8, 000,000

Receivables P666, 667

Average Accounts payable P666, 667

Required:

a. Define the cash conversion cycle.

b. Calculate XYZs Average Age of Inventory.

c. Calculate XYZs Average Collection Period.

d. Calculate the Accounts Payable Period.

e. Calculate the XYZs cash conversion cycle.

f. Advise XYZ on what they should do to reduce their cash conversion cycle.

g. Explain two strategies that XYZ can use to fund its cash conversion cycle requirements.