Question $6$

ABC Co$.$ is in the production of plastic bottles. They produce $10,000$ pieces per day. They purchase

their raw material and pay them $60$ days later. The cost of raw material is $0\mathrm{.}25$$ per unit. The raw

material inventory is enough for $10$ days of production and the finished goods inventory is $300,0000$

pieces. Once the raw material I enters production it is converted to finished goods, hence there is no

Work$-$in$-$Progress inventory. Sales are done on a $90$ days term, i$.$e$.$ sales proceeds are collected $90$

days from sales.

a$)$ What is Company ABC's cash conversion cycle? Draw the cash flow cycle.

b$)$ What is the Working Capital requirement of the Company?