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8. Consider the graph below and answer the questions which follow. (11 pts) Inventory Conversion Period (79.0 days) Receivables Collection Period (43.2 days) Payables Deferral
8. Consider the graph below and answer the questions which follow. (11 pts) Inventory Conversion Period (79.0 days) Receivables Collection Period (43.2 days) Payables Deferral Period (8.8 days) Cash Conversion Cycle (79.0 days + 43 2 days - 8.8 days = 113.4 days) Purchase Raw Materials Create a Payable Pay for Purchased Materials Sell Finished Goods Create a Receivable Days Collect Accounts Receivable (CASH OUT) (CASH IN) a. Describe the Cash Conversion Cycle; include references to the graph. (4 pts) b. Define four actions a firm could take to reduce its cash conversion cycle. (4 pts) c. Why is the cash conversion cycle important to the financial manager? (3 pts)
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