Use the financial statements supplied below for International Motor Corporation (IMC) to answer the following questions.

a. Calculate the cash conversion cycle for IMC for both 2010 and 2011. 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?

INTERNATIONAL MOTOR CORPORATION

Income Statement ($ millions) for the Years Ending December 31

INTERNATIONAL MOTOR CORPORATION
Balance Sheet ($ millions) As of December 31

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2010 0,000 52,000 $ 8000 2011 Sales $75,000 1,tie $14,000 ー Cost of goods sold Gross profit $20008000 1030 S 4700 2350 6000 1400 300 Selling, general, and administrative expenses Operating profit S 6000 Interest expense Eamings before tax S 600 Earnings after tax $ 3080 $6100 Accounts payable 3600 4600 6200 6600 Total current Total current assets $12,080 19,600 liabilities Net plant, property $10,380 $12,061 Long-term debt $6500 S 7000 $23,087 $20098 Toaliabilities $16,880 $19,061 and equipment $35,16 $39.698 Equity Common stock 2 $18,287 S20,637