1. American Products is concerned about managing cash efficiently. On the average, inventories have an age of 90 days, and accounts receivable are collected in 60 days. Accounts payable are paid approximately 30 days after they arise. The firm has annual sales of about $30 million. Assume there is no difference in the investment per dollar of sales in inventory, receivables, and payables and that there is a 365-day year.

a. Calculate the firms operating cycle.

b. Calculate the firms cash conversion cycle.

c. Calculate the amount of resources needed to support the firms cash conversion cycle.

d. Discuss how management might be able to reduce the cash conversion cycle.