Merton Analytics is considering changes in its working capital policies to improve its cash ow cycle. Mertons sales last year were $4,250,000 (all on credit), and its net prot margin was 7%. Its inventory turnover was 7.5 times during the year, and its DSO was 41 days. Its annual cost of goods sold was $2,200,000. The rm had xed assets totaling $585,000. Mertons payables deferral period is 42 days.

a. Calculate Mertons cash conversion cycle.

b. Assuming Merton holds negligible amounts of cash and marketable securities,

calculate its total assets turnover and ROA.

c. Suppose Mertons managers believe the annual inventory turnover can be raised to 9.5 times without affecting sales. What would Mertons cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 9.5 for the year?