Hercules Wholesalers Ltd has been particularly concerned with its liquidity position in recent months. The most recent income statement and statement of financial position of the business are as follows:

Income statement for the year ended 31 December last year

Sales revenue		452
Cost of sales Opening inventories Purchases	125 341 466
Closing inventories	143	323
Gross profit		129
Expenses		132
Loss for the year		3

Statement of financial position as at 31 December last year:

ASSETS

Non-current assets

Property, plant and equipment..................................................................357

Current assets

Inventories................................................................................................143

Trade receivables.....................................................................................163

306

Total Assets..............................................................................................663

EQUITY AND LIABILITIES

Equity

Ordinary Share Capital.............................................................................100

Retained earnings.....................................................................................158

258

Non-current Liabilities

Borrowings-Loan.......................................................................................120

Current Liabilities

Trade Payables......................................................................................145

Borrowings-Bank Overdraft......................................................................140

285

Total Equity and Liabilities 663

Explain why

Hercules Wholesalers Ltd is concerned about its liquidity position.

Calculate the operating cash cycle for Hercules Wholesalers Ltd.

State what steps may be taken to improve the operating cash cycle of the business.