Question $02$

The following details are given for ABC Manufacturing company.

$($a$)$ What is the dollar value of the average inventory held by the firm? $(1\mathrm{.}5$ marks$)$

$($b$)$ Calculate the firm's operating cycle and cash conversion cycle. $(2$ marks$)$

$($c$)$ ABC company had been cutting back on their working capital investments, most recently

by reducing inventories. Suppose that the firm is managing their working capital assets to

maximize shareholder value. If market interest rates drop, reflecting a lower opportunity cost

of funds for ABC $,$ how should they change working capital account balances? $(2\mathrm{.}5$ marks$)$