Str The officiency of Working Capital Management NIL, Chairman of Roy Inc is concerned about the firm's high level of Investment in short- term assets. NIL is considering the reduction in such investments, which can be achieved by improved management of cash. Hence, NIL handed over the task of assessing the firm's cash management efficiency Roy Bira] wants to start the assessment by scrutinizing Roy's operating cycle and cash conversion Cycle Biraj asked his subordinates for all the relevant information, and he was provided with the followings: to Biraj the CEO Roy Chowdhury (competitor) Industry 25 45 90 Average payment period (In days Average Age of Inventory (Indays) Average Collection 120 80 85 35 Period (In days) 92 Ctrl Roy associates a cost of $ 63,000 to extend the payment period to 40 days Roy associates a cost of $ 160,000 to reduce inventory age to 85 days Biraz used big data analyties, and statistical modeling to see the outcome 2.1. carn discount for payments made within 10 days The statistical model pre dieted that such discount would reduce Roy's collection period to 92 days. In addition, the model predicted the following changes of a Before After Revenue $13,750,000 of $1,250,000 Additional sales than before Annual Investment in $13,000,000 $19,100,000 operating cycle Variable costs 180% of sales 80.1. of sales Bad Debts nla n/a 75% of total sales will use the benefit of the newly introduced 2.1. discount The operating cycle investment across all working capital accounts will be same Biraz was not sure if Roy was managing an optimum level of investment in short-term resources. However, he kno knew that current annual (365 days) interest rate in the market was 6.9.1., and wanted to chea check if there are missing opportunities of earning extra by managing the cash conversion eyele more efficiently Requinements a constant rate for purchases, production, and sales the thrrought the year, what are Roy and its competitors enisting operating cycle (oc), eash conversion cycle Cece), and how much is resource is ab absorbed in there 2 a @ Assuming cees ccc 6 If Roy can optimize operations according to industry standards, what would its operating Syele coc) cash conversion eyele ecce) how resource will be mea absorbed in lits under there more efficient conditions ? what about Chowdhury ? What is the annual cost of Roy's operational inefficiency, or in other words, longer cec? @ Based on your findings so far, should Roy & Chowdhury try to achiere industry level efficiency? Why on why not ? Str The officiency of Working Capital Management NIL, Chairman of Roy Inc is concerned about the firm's high level of Investment in short- term assets. NIL is considering the reduction in such investments, which can be achieved by improved management of cash. Hence, NIL handed over the task of assessing the firm's cash management efficiency Roy Bira] wants to start the assessment by scrutinizing Roy's operating cycle and cash conversion Cycle Biraj asked his subordinates for all the relevant information, and he was provided with the followings: to Biraj the CEO Roy Chowdhury (competitor) Industry 25 45 90 Average payment period (In days Average Age of Inventory (Indays) Average Collection 120 80 85 35 Period (In days) 92 Ctrl Roy associates a cost of $ 63,000 to extend the payment period to 40 days Roy associates a cost of $ 160,000 to reduce inventory age to 85 days Biraz used big data analyties, and statistical modeling to see the outcome 2.1. carn discount for payments made within 10 days The statistical model pre dieted that such discount would reduce Roy's collection period to 92 days. In addition, the model predicted the following changes of a Before After Revenue $13,750,000 of $1,250,000 Additional sales than before Annual Investment in $13,000,000 $19,100,000 operating cycle Variable costs 180% of sales 80.1. of sales Bad Debts nla n/a 75% of total sales will use the benefit of the newly introduced 2.1. discount The operating cycle investment across all working capital accounts will be same Biraz was not sure if Roy was managing an optimum level of investment in short-term resources. However, he kno knew that current annual (365 days) interest rate in the market was 6.9.1., and wanted to chea check if there are missing opportunities of earning extra by managing the cash conversion eyele more efficiently Requinements a constant rate for purchases, production, and sales the thrrought the year, what are Roy and its competitors enisting operating cycle (oc), eash conversion cycle Cece), and how much is resource is ab absorbed in there 2 a @ Assuming cees ccc 6 If Roy can optimize operations according to industry standards, what would its operating Syele coc) cash conversion eyele ecce) how resource will be mea absorbed in lits under there more efficient conditions ? what about Chowdhury ? What is the annual cost of Roy's operational inefficiency, or in other words, longer cec? @ Based on your findings so far, should Roy & Chowdhury try to achiere industry level efficiency? Why on why not