Problem 1: The following table shows income statement and balance sheet data for five US industries in 2017. Calculate the cash cycle for each industry. Computers Oil and Food Food Pharma and Coal Stores Peripherals Income Statement Data: Sales $665.90 $426.50 $801.00 $215.00 $473.20 Cost of goods sold $595.10 $351.40 $756.80 $187.70 $450.00 Balance Sheet Data: Inventory $66.80 $55.80 $43.20 $10.30 $26.90 Accounts receivable $55.60 $67.10 $51.80 $22.70 $6.40 Accounts payable $48.00 $41.30 $49.30 $36.50 $22.70 Ratios: Inventory period A/R period A/P period Cash Cycle: Source: US Department of Commerce Problem 2: Icarus Company manufactures suntan lotion. Its credit terms are 2/20, net 40. Suppose a retailer purchases ten cases of suntan lotion for $200 per case. a. If the retailer takes the full credit period to pay, how much should the retailer remit to Icarus? When should payment be made? b. When must the retailer pay in order to receive the discount offered by Icarus? If the retailer takes the discount, how much should they remit to Icarus? c. If the retailer does not take advantage of the discount, how many days' credit do they receive? What is the effective interest rate paid? 1