QUESTION 5.

5.1 14.16 Cash conversion cycle: Karolin Handwerk GmbH has net sales of 4.23 million with 50 per cent of it being credit sales. Its cost of goods sold is 2.54 million. The firms cash conversion cycle is 47.9 days. The firms operating cycle is 86.3 days. What is the firms accounts payable? 5.2 14.32 What impact would the following actions have on the operating and cash conversion cycles? Would the cycles increase, decrease or remain the unchanged?

a. Less raw material than usual is purchased. b. The company encounters unseasonable demand and inventory declines rapidly. c. Tighter terms of payment are demanded by suppliers. d. The cash discounts offered to customers are increased. e. All else remaining the same, due to labour turnover and poor efficiency, the cost of goods sold increases.