1. A manufacturing firm has sales of $780K of which COGS is 54%, raw material purchases are 32% and labour costs are 17% (balance of inputs are from fixed costs). Its A/R DSO is 46 days, inventory DCO is 16 days, supplier credit DPO is 37 days and labour credit DWO is 14 days. Its sales next year are forecasted to increase by 15%. Assuming terms of trade are stable, how much extra liquidity (000 = K) will be required to finance the increase in sales?: * A. $13K B. $22K C. $48K D. $123K

2. A firm selling on 30-day payment terms (DSO = 34 days) reckons it can increase sales by 20% if it offers 45 days payment terms with actual payments coming in 50 days. Its sales are currently $567K. Inventory balances ($56K) and supplier credit ($34K) would increase in line with sales. The banks $30K short-term revolving line of credit is margined requiring 200% coverage by A/R and is currently 66% drawn. How much extra financing is required?: * A. $11K B. $55K C. $21K D. $34K