6-10: Working Capital Management The following scenario relates to questions 6-10. You have been provided with the following information relating to Clang plc, a firm that has experienced rapid sales growth over the last year. 20x4 20x3 Sales 14,000 10,000 Cost of Sales 12,610 8,800 Gross Profit 1,390 1,200 Inventory Trade Receivables Current Assets Current Liabilities Net Current Assets 1,600 2,300 3,900 3,100 800 800 700 1,500 1,100 400 Inventory Days 46.31 33.18 Debtor Days 59.96 25.55 Creditor Days 89.73 45.63 6. What is Clang ple's working capital requirement in days, assuming current liabilities are all Accounts Payable? A. 16.55 days. B. 76.08 days. C. 103.38 days. D. 106.28 days. 7. Which of the following is an indicator that Clang plc may be overtrading and risking a liquidity problem? A. Sales have increased by 40% and inventory has increased by 100% B. Net Current Assets Increased by 100% and profit has increased by 15.8% C. Trade Receivables and Inventory have both increased significantly faster than sales growth. D. The gross profit margin has declined from 12.0% to 9.9% and the working capital cycle is longer. 8. Clang ple's bank have asked Clang to reduce their overdraft within 7 days. Which of the following actions is most likely to reduce the overdraft? A. With-recourse sale of receivables. B. Increasing inventory days. C. Reducing payables days. D. Reducing the product selling price to increase demand. 9. If Clang is overtrading, which of the following actions is most likely to return the business to a positive operating cash flow? A. Cutting the selling price of goods to sell more. B. Offering early settlement discounts to encourage credit customers to pay earlier. C. Increasing the product selling price. D. Increasing advertising to increase sales volumes. 10 Which industry is Clang plc most likely to be in? A. Management consulting services B. Retail food sales C. Banking D. Equipment manufacturing