The company described below is struggling to find sufficient cash to meet its short-term needs.

XYZ, Inc. has the following financial information:

Revenues: $45,000,000

COGS: $13,500,000

Inventory: $7,500,000

Inventory turns: 1.8

Average industry inventory turns: 2.75

Accounts receivable: $11,250,000

Days receivable: 90

Average industry days receivable: 60

Accounts payable: $1,350,000

Days payable: 36

Average industry days payable: 60

A. . In the scenario related to XYZ, Inc above, calculate the Cash Gap? What does that number mean?

B. Using the information you have calculated and that was provided for XYZ, Inc., what is the ideal cash gap to which the company should strive?

C. If the annual interest rate on a loan taken out to cover the cash gap is 6%, how much money would the company save if it could change its business practices and match the ideal cash gap?

Quick, correct, and COMPLETE responses will receive high ratings!

Thanks!