Use the financial statements supplied on the next page for International Motor Corporation

( IMC) to answer the following questions.

a. Calculate the cash conversion cycle for IMC for both 2022 and 2023. 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?Appendix

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INTERNATIONAL MOTOR CORPORATION Income Statement (in $ million) for the Years Ending December 31 2022 2023 Sales $ 60,000 $ 75,000 Cost of goods sold 52,000 61,000 Gross profit $ 8,000 $ 14,000 Selling and general and administrative expenses 6,000 8,000 Operating profit $ 2,000 $ 6,000 Interest expense 1,400 1,300 Earnings before tax $ 600 $ 4,700 Taxes Earnings after tax 300 2,350 300 $ 2,350