Question
Ingram Inc. had the following data for 2008 (in millions). The new CFO believes that the company could improve its working capital management sufficiently to
Ingram Inc. had the following data for 2008 (in millions). The new CFO believes that the company could improve its working capital management sufficiently to bring its NWC and CCC up to the benchmark companies' level without affecting either sales or the costs of goods sold. Ingram finances its net working capital with a bank loan at an 8% annual interest rate, and it uses a 365-day year. If these changes had been made, by how much would the firm'spre-tax income have increased?
Original Benchmark
Data Related CCC CCC Sales $100,000
Cost of goods sold $80,000
| Inventory (ICP) | $20,000 | 91.25 | 38.00 |
| Receivables (DSO) | $16,000 | 58.40 | 20.00 |
| Payables (PDP) | $5,000 | 22.81 | 30.00 |
|
|
| 126.84 | 28.00 |
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Financial Institutions Management
Authors: Anthony Saunders
1st Edition
0256110565, 9780256110562
