1.CASH CONVERSION CYCLE

Zane Corporation has an inventory conversion period of 49 days, an average collection period of 43 days, and a payables deferral period of 21 days. Assume 365 days in year for your calculations.

What is the length of the cash conversion cycle? Round your answer to two decimal places. days

If Zane's annual sales are $2,854,580 and all sales are on credit, what is the investment in accounts receivable? Round your answer to the nearest cent. Do not round intermediate calculations. $

How many times per year does Zane turn over its inventory? Assume that the cost of goods sold is 75% of sales. Use sales in the numerator to calculate the turnover ratio. Round your answer to two decimal places. Do not round intermediate calculations. times

2.RECEIVABLES INVESTMENT

McEwan Industries sells on terms of 3/10, net 30. Total sales for the year are $1,073,000; 40% of the customers pay on the 10th day and take discounts, while the other 60% pay, on average, 80 days after their purchases. Assume 365 days in year for your calculations.

What is the days sales outstanding? Round your answer to two decimal places. days

What is the average amount of receivables? Round your answer to the nearest cent. Do not round intermediate calculations. $

What is the percentage cost of trade credit to customers who take the discount? Round your answers to two decimal places. %

What is the percentage cost of trade credit to customers who do not take the discount and pay in 80 days? Round your answers to two decimal places. Do not round intermediate calculations.

Nominal cost:	%
Effective cost:	%

What would happen to McEwans accounts receivable if it toughened up on its collection policy with the result that all nondiscount customers paid on the 30th day? Round your answers to two decimal places. Do not round intermediate calculations. Days sales outstanding (DSO) = days Average receivables = $

3. WORKING CAPITAL INVESTMENT

Pasha Corporation produces motorcycle batteries. Pasha turns out 2,500 batteries a day at a cost of $6 per battery for materials and labor. It takes the firm 20 days to convert raw materials into a battery. Pasha allows its customers 40 days in which to pay for the batteries, and the firm generally pays its suppliers in 30 days. Assume 365 days in year for your calculations.

What is the length of Pasha's cash conversion cycle? Round your answer to two decimal places. days

At a steady state in which Pasha produces 2,500 batteries a day, what amount of working capital must it finance? Round your answer to the nearest dollar. $

By what amount could Pasha reduce its working capital financing needs if it was able to stretch its payables deferral period to 32 days? Round your answer to the nearest dollar. $

Pasha's management is trying to analyze the effect of a proposed new production process on its working capital investment. The new production process would allow Pasha to decrease its inventory conversion period to 15 days and to increase its daily production to 3,000 batteries. However, the new process would cause the cost of materials and labor to increase to $12. Assuming the change does not affect the average collection period (40 days) or the payables deferral period (30 days), what will be the length of its cash conversion cycle and its working capital financing requirement if the new production process is implemented? Round your answers to two decimal places.

Cash conversion cycle		days
Working capital financing	$