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Consider the financial statements for Ace Inc. Ace Inc. Income Statements ($000s) Year 1 Year 2 Sales $249,770 $290,900 Cost of goods sold 165,040 172,750

Consider the financial statements for Ace Inc.

Ace Inc. Income Statements ($000s)

Year 1

Year 2

Sales

$249,770

$290,900

Cost of goods sold

165,040

172,750

Gross margin

84,730

118,150

Selling & admin expenses

67,710

75,680

Depreciation

13,200

14,660

Operating income

3,820

27,810

Interest expense

890

820

Profit before tax

2,930

26,990

Income tax (at

3535%)

1,026

9,447

Net income

$1,904

$17,543

Common dividend paid

$1,080

$1,080

Ace Inc. Balance Sheets at December 31 ($000s)

Year 1

Year 2

Cash

$2,340

$2,883

Accounts receivable

29,020

31,440

Inventories

17,910

20,490

Total current assets

49,270

54,813

Net property & equipment

19,200

24,230

Total assets

$68,470

$79,043

Notes payable: bank

$19,450

$13,390

Accounts payable

14,920

15,900

Total current liabilities

34,370

29,290

Long-term debt

21,060

20,250

Common equity

13,040

29,503

Total liabilities and equity

$68,470

79,043

. Given the following data:

Year 1

Year 2

Inventory days

39.6139.61

43.2943.29

Receivable days

42.4142.41

39.4539.45

Payable days

33.0033.00

33.5933.59

Suppose year 2's days of inventory were reduced to

35.9935.99.

How much cash would be freed up?

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