TOPIC: WORKING CAPITAL MANAGEMENTCYCLE You are an accounting technician working at Shoes for You Ltd, a company that manufactures and distributes a range of fashion shoes. All shoes are made at the companys factory in the country of Bushai, where materials and labour have historically been very cheap. The shoes are then exported tothe UK where they are sold to a number of retail outlets. All costs are incurred in Bushais unit of currency. All materials are paid for in cash at the time of purchase. Production staff are paid their wages daily in cash. They have not had a pay increase in the last year. All other over heads, production, and sales are on credit. All sales are to UK customers and are in credit. They are therefore invoiced and amounts are received in sterling. Any finance needed for the business is also obtained from the UK. You have estimated the figures below for the coming year. Sterling has been used for all figures so as to avoid any distortion caused by high inflation in bushai. Revenue 2,500,000 Average trade receivables 410,000 Materials purchases 630,000 Production staff wages 450,000 other production overheads -350,000 Sales overheads -320,000 Net profit margin 30% Average inventory: Finished goods 325,000 Work on progress (65% complete) 195,000 Raw materials 133,000 Average trade payables 73,000 The economy in bushai has recently become unstable. This has led to a rapid increase in inflation levels over the last year, from 10% at the beginning of the year 25% at the end of the year. Interest rates are controlled by bushai's central bank. Inflation in the UK has remained stable at about 4% per annum. Required: a) Calculate the cash operating cycles. b) The raw material holding period has doubled over the last year. State the main financial advantages and the main financial disadvantages of this happening paying attention to the fact that inflation has increased over the year. c) Discuss Briefly the general problems associated with inflation as listed below and consider how each problem affects shoes for you: Redistribution of income and wealth , The balance of trade ( do NOT discuss exchange rates) ,Higher interest rates.