Your job involves financial modeling. You gather the following information from pro forma financial statements for the upcoming year. Sales $180,000 Cost of goods sold $120,000 Accounts payable $19,000 Accounts receivable $27,000 Total assets $72,000 Inventory $16,000 After building in many other assumptions, your preliminary analysis indicates that the external financing needed (EFN) for the coming year will be $7,000.

a. Calculate the average days payable (ADP) that was assumed when deriving the initial amount of EFN (i.e., $7,000) from the preliminary model.

b. You now want to make adjustments in your pro forma financial policies so that you will eliminate the need for external financing (that is, you want to have an EFN of $0). You remember from our discussions that changing the average days payable (ADP) will affect the need for external financing. Calculate what the average days payable period (ADP) must be so that the firm will have an EFN of $0.