1. Calculate the average collection period, average payment period, inventory turnover period and cash conversion cycle for the following firm (1Year = 360 Days):

Income statement data: Sales 10000, COGS 9000

Balance sheet data: Inventory 1100, Accounts receivable 400, Accounts payable 600

What effect will all the following activities have on the cash conversion cycle?

• the company reduces the level of inventory by 10%,
• the company changes the terms of sale and 60% of customers pay after 5 days while the remaining pay after 30 days (with sales on the same level) and
• the company has extended its own payment conditions by one week.