In 2012 teresa Leal was named treasurer of Casa de Diseno. They entered the plastic furniture market in 2004. Leal has decided to study the firm's cash management practices.To determine the effects of those practices, she must first determine the current operating and cash conversion cycles.In her investigations,she found that Casa de Diseno purchases all its raw materials and productive supplies on open account.The company is operating at production levels that preclude volume discounts.Most supplies do not offer cash discounts and Casa de Diseno accounts payable showed that its average payment period is 30d days.Leal consulted industry data and found that the industry average payment period was 39 days.Investigation of six california furniture manufactures revealed that their average payment period was also 39 days. Next,leal studied the production cycle and inventory policies.Casa de diseno tries not to hold any more inventory than necessary in either raw materials or finished goods.The average inventory age was 110 days.Leal determined that the industry standard as reported in a survey was 83 days. Casa de diseno sells to all of its customers on a net-60 basis,in line with the industry trend to grant such credit terms on speciality furniture.Leal discovered by aging the accounts receivable,that the average collection period for the firm was 75 days.Investigation of the trade assoc.. and Calif. manufactures averages showed that the same collection period existed where net-60 credit terms were given.Where cash discounts were offered,the collection period was significantly shortened.leal beleived that if Casa de Diseno were to offer credit terms of 3/10 net 60,the average collection period could be reduced by 40 percent. Casa de Diseno was spending an estimated $26,500,000 per year on operating cycle investments.leal considered this expenditure level to be the minimum they could expect the firm to disburse during 2012.her concern was whether the firms cash management was an efficient as it could be.She knew the compoany paid 15% annual interest for its resource investment. (assume a 365-day year conversion cycle.) A. . Assuming a constant rate for purchases,production and sales throughout the year,what are Casa de Diseno existing operating cycle,cash conversion cycle and resource investment need? B. If Leal can optimize Casa de Diseno's operations according to industry standards,what will Casa's operating cycle,cash conversion cycle and resource investment need to be under these more efficient conditions. C. In terms of resource investment requirements,what is the cost of casa de Diseno's operational inefficency? D. 1. In addition to acheiving industry standards for payables and inventory,the firm can reduce average collection period by offering credit terms of 3/10 net 60,what additional savings in resource investment costs will result from the shortened cash conversion cycle,assuming that the level of sales remains constant? 2. If the firms sales(all on credit) are $40,000,000 and 45% of the customers are expected to take the cash discount,by how much will the firms annual revenues be reduced as a result of the discount. 3. If the firms variable cost of $40,000,000 in sales is 80%,determine the reduction in the average investment in accounts receivable and the annual savings that will result from this reduced investment,assuming that sales remain constant. 4. If the firms bad debts expense decline from 2% to 1.5% of sales,what annual savings will result,assuming the sales remain constant? 5. Use your findings in parts (2 through 4) to assess whether offering the cash discount can be justified.Explain why or why not. E. On the basis of your analysis in parts a through d, what recommendations would you offer Leal? F. Review for Leal the key sources of short-term financing other than accounts payable, that she may consider for financing Casa de Diseno's resource investment need calculated in part b. Be sure to mention both unsecured and secured sources