Robinson expects its 2012 sales and cost of goods sold to grow by 20 percent over their 2011 levels.

a. What will be the affect on its levels of receivables, inventories, and payments if the components of its cash conversion

cycle remain at their 2011 levels? What will be its net investment in working capital?

Receivables

Inventories

Payments

Net investment in working capital

New Sales

Sales/day

New COGS

COGS/day

b. What will be the impact on its net investment in working capital in 2012 if Robinson is able to reduce its inventory

period by ten days?

Estimated AR if reduced by 0 days
Sales/day
Old collection period
New collection period
New AR estimate
Estimated Inventory if conversion period reduced by 10 days
COGS/day
Old conversion period
New conversion period
New inventory estimate
Estimated AP if payment period increased by 0 days
COGS/day
Old payment period
New payment period
New AP estimate
2012 working capital
Did the working capital increase or decrease from part a?