Comprehensive Financial Management and Analysis: Cash ConversionCycle, Dividend Policies, Trade Credit, and Current Asset InvestmentStrategies1. Cash conversion cyclePrimrose Corp has $12 million of sales, $3 million of inventories, $4 million ofreceivables, and $1 million of payables. Its cost of goods sold is 85% of sales, and itfinances working capital with bank loans at an 8% rate. Assume 365 days in year foryour calculations. Do not round intermediate steps.1.What is Primrose's cash conversion cycle (CCC)? Round your answer to twodecimal places.________days2.If Primrose could lower its inventories and receivables by 9% each andincreaseits payablesby 9%, all without affecting sales or cost of goods sold, what wouldbe the new CCC? Round your answer to two decimal places._______days3.How much cash would be freed-up? Round your answer to the nearest cent.$________By how much would pre-tax profits change? Round your answer to the nearest cent.$________Answer:Preview Mode
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