1. Given the following balance sheet and income statement, please calculate the cash conversion cycle and state what it means.

Balance Sheet (in million EUR)

Assets	2017	2018	Liabilities and shareholders equity	2017	2018
Current assets Cash Marketable securities Inventory Accounts receivable Total current assets	3.5 0.5 8 10 22	2.5 0 12 13 27.5	Current liabilities Bank loans Accounts payable Total current liabilities	5 6 11	3.5 9 12.5
Fixed assets Gross investment Less depreciation Net fixed assets	22 6 16	27 7 20	Long-term debt Net worth	2 25	2.5 32.5
Total Assets	38	47.5	Total liabilities and owners equity	38	47.5

Income Statement (2018, in million EUR)

Sales Operating costs Depreciation

169 150 1

EBIT Interest Pre-tax income Tax (50%) Net Income

18 1 17 8.5 8.5

Note: Dividend = 1

In Question 1, please provide the Sources and Uses analysis and identify the increase in cash balance. Does your answer match with the items on the balance sheet? How?

In Question 1, if you want to reduce the cash conversion cycle, what can you do?