Bookshelf Online: Financial.. X 18-5. (Calculating the operating and cash conversion cycles) (Related to Checkpoint 18.1 on page 585) The Caraway Seed Company has for many years cultivated and sold what are known as heritage plants and seeds. For example, it has sought out older varieties of tomato plants that are no longer grown by commercial vegetable farmers because they take too long to mature, do not ship well, or do not hold up for long on store shelves. The company has recently been considering ways to reduce its invest- ment in working capital in order to make itself more profitable. At present, it has an inventory conversion period of 90 days and offers credit terms of 30 days, which are taken full advantage of by the majority of its customers. The company purchases its inventory items on credit terms that allow it 45 days to pay, but it has always followed a policy of making cash payments for invoices as soon as they are received, so the accounts payable deferral period is typically only 5 days a. What are Caraway's operating and cash conversion cycles? b. If Caraway decides to take full advantage of its credit terms and delay payment until the last possible date, how will this impact its cash conversion cycle? c. What is your recommendation to the company with regard to its working capital management practices and why? Managing Current Liabilities