Q7 Brentwood Enterprises have asked for your assistance, providing details on the short-term financial position and financial planning of the company. The following information is provided;

Average inventory: $1,184,000

Average receivables: $1,809,600

Average payables: $768,000

Net sales: $13,950,000

Cost of Goods Sold: $8,400,000

a) Calculate the Operating Cycle and the Cash Cycle (in days)?

b) What are the differences between Flexible and Restrictive short-term financial policies?

c) What factors need to be considered when choosing a financial policy? Explain what a Compromise Policy is.