Use the financial statements shown below for the International Motor Corporation (IMC) to answer the following questions: a. Calculate the cash conversion cycle for IMC for both 2020 and 2021. What change has occurred, if any? All else being equal, how does this change affect IMC's need for cash? Answer: The cash conversion cycle (CCC) for 2020 is ______ days. (Round to one decimal place.) Answer: The cash conversion cycle (CCC) for 2021 is _________ days. (Round to one decimal place.) Answer: The cash cycle has _______. (Answer "increased", "decreased", or "not changed") Answer: All else being equal, this change (or lack of change) (answer "increases", "decreases", or "does not change") the amount of cash needed. b. IMC's suppliers offer terms of net 30. Does it appear that IMC is doing a good job of managing its accounts payable? (Hint: use a 365-day year.) Choose from the following. _______(Answer "A", "B", "C", or "D".) A. The firm is paying too early; it could be earning interest on its money. B. The firm should be paying after 30 days, if there is no penalty, to take advantage of additional cash on hand. C. The firm should be paying within 10 days. D. The firm is paying when it should be.

INTERNATIONAL MOTOR CORPORATION

INCOME STATEMENT (in millions) for the years ending December 31
	2020	2021
Sales	$60,000	$75,000
(-) Cost of goods sold	52,000	61,000
Gross profit	$8,000	$14,000
(-) Selling and general and administrative expenses	6,000	8,000
Operating profit	$2,000	$6,000
(-) Interest expense	1,400	1,300
Earnings before tax	$600	$4,700
(-) Taxes	300	2,350
Earnings after tax	$300	$2,350

INTERNATIONAL MOTOR CORPORATION

BALANCE SHEET (in millions) as of December 31
	2020	2021		2020	2021
Assets			Liabilities
Cash	$3,080	$6,100	Accounts payable	$3,600	$4,600
Accounts receivable	2,800	6,900	Notes payable	1,180	1,250
Inventory	6,200	6,600	Accruals	5,600	6,211
Total current assets	$12,080	$19,600	Total current liabilities	$10,380	$12,061
Net plant, property, and equip.	$23,087	$20,098	Long-term debt	$6,500	$7,000
Total assets	$35,167	$39,698	Total liabilities	$16,880	$19,061
			Equity
			Common stock	$2,735	$2,735
			Retained earnings	$15,552	$17,902
			Total equity	$18,287	$20,637
			Total liabilities and equity	$35,167	$39,698