Primrose Corp's Cash conversion cycle: Calculating amount of cash being freed up and its effect on pre-tax profits.
Primrose Corp has $15 million of sales, $2 million of inventories, $3 million of receivables, and $1 million of payables. Its cost cost of goods sold is 80% of sales, and it finances working capital with bank loans at an 8% rate. What is Primrose's cash conversion cycle (CCC)? If Primrose could lower its inventories and receivables by 10% each and increase its payables by 10%, all without affecting either sales or cost of goods sold, what would the new CCC be, how much cash would be freed up, and how would that affect pre-tax profits?© SolutionLibrary Inc. solutionlibary.com 9836dcf9d7 https://solutionlibrary.com/business/accounting/primrose-corps-cash-conversion-cycle-calculating-amount-of-cash-being-freed-up-and-its-effect-on-pre-tax-profits-7ecn