QUESTION 3 FIN 123 (MID SEMESTER TEST)/Page 3 of 4 a) Linked Sdn Bhd has the following financial data: Stocks RM 5,000,000 Debtors RM 6,200,00 Creditors RM 2,200,000 Revenue RM 67,000,000 COGS RM32,000,000 You are required to determine the following: a) Inventory conversion period b) Debtors collection period c) Payables credit period d) Cash conversion cycle (12 marks) The monthly cash requirement forecast by Encik Azman, the finance manager is RM6,000,000. Given that the cost of converting securities into cash is RM560 per transaction. Encik Azman has the opportunity cost of 8% per annum. Calculate : b) i) ii) iii) iv) v) vi) The amount of cash it obtains each time it sells the securities. The frequency the firm will sell the securities. Average cash balance Annual opportunity cost of funds Transactions costs Total costs (12 marks) b) Why holding stocks are important for firms? (1 marks) (Total 25 marks)