12. Marshall Inc. recently hired your conting firm to improve the company's performance. It has been highly profitable but has been experiencing cash shortages due to its high a th me. As one part of your analysis, you want to determine the firm's cash conversion cycle. Using the following information and a 365day year, what is the firm's present cash conversion cycle! $75.000 $600,000 $360,000 $160,000 $25,000 Average inventory Annual sales - Annual cost of goods sold - Average accounts receivable - Average accounts payable - a. 120.6 days b. 126.9 days c. 133.6 days d. 140.6 days e. 148.0 days 13. Pascarella Inc. is revising its payables policy. It has annual sales of $50,735,000, an average inventory level of $15.012,000, and average accounts receivable of $10,008,000. The firm's cost of goods sold is 85% of sales. The company makes all purchases on credit and has always paid on the 30th day. However, it now plans to take full advantage of trade credit and to pay its suppliers on the 40th day. The CFO also believes that ales can be maintained at the existing level but inventory can be lowered by $1,946,000 and accounts receivable by $1.946,000. What will be the net change in the cash conversion cycle, assuming a 365day year? a. -26.6 days b.-29.5 days c. -32.8 days d. -36.4 days e. -40.5 days 14. Suppose a firm changes its credit policy from 2/10 net 30 to 3/10 net 30. The change is meant to meet competition, so no increase in sales is expected. The average accounts receivable balance will probably decline as a result of this change. a. True b. False 15. Dimon Products' sales are expected to be $5 million this year, with 90% on credit and 10% for cash. Sales are expected to grow at a stable, steady rate of 10% annually in the future. Dimon's accounts receivable balance will remain constant at the current level, because the 10% cash sales can be used to support the 10% growth rate, other things held constant. a. True b. False