Crackers is a small corporation that manufactures one specific type of biscuits. Crackers turns out 3,000 boxes of biscuits a day at a cost of $3 per box in terms of materials and labour. It takes 20 days to convert raw materials into a box of biscuits. Crackers allows its customers 30 days in which to pay for the pens, and the firm generally pays suppliers in 21 days.

1. What is the length of Crackers cash conversion cycle?

2. If Crackers always produces and sells 3,000 boxes of biscuits a day, what amount of working capital must it finance?

3. Explain at least two ways how Crackers could reduce its working capital financing needs.

4. Explain the significance of technical insolvency.