Q5. (a) Paine Industries is into manufacturing of auto parts for cars and heavy commercial vehicles. Paine Ind. used to maintain an operating cycle of 60 days. Now, Covid-related slowdown has impacted its customers financial health causing the operating cycle to undergo a change. Use this information to calculate the Operating cycle and cash cycle. Can a company have a negative cash cycle?

Item	Beginning		Ending
Inventory	34,378		42,106
Account Receivables	25,172		36,965
Account Payables	30,367		32,677
Sales		4,16,376
Cost of Goods Sold		3,25,745

(b) Paine Industries also wants to revisit its inventory management because of the slowdown. The company is now expecting to uses lesser input items. Paine now expects to use 2300 engine cylinders every month and plans to order 4600 units every two months. Carrying cost for each engine cylinders is Rs.50 per year. Each order requires transport and insurance-related costs of Rs. 14,000? What should be the new optimal quantity of engine cylinders to be order every two months? Should Paine increase or decrease the order size?