Assuming 1000 in Working Capital

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Assuming 1000 in Working Capital. Examine your firm's working capital policy.  a.      Find the cash conversion cycle for the last 3 years. What (if any) changes do you see in the cash conversion cycle?

b.      Based on your days sales outstanding, select the closest 30-day increment to that result (30, 60, 90 or 120 days). Assume your firm sells on terms of 3/20, net closest increment. Example: Days sales outstanding = 55 days, then the closest is 60 days and your terms are 3/20 net 60. Find the APR and effective rate on the cost of trade credit.

c.      Your firm discovers that one of their large customers, Shad Services, does not pay until day 100 days after your net date. This is causing the days sales outstanding to appear larger than it is. What is the effective cost of trade credit for Shad?

d.      You want to make Shad pay earlier. What can you do to make that happen? What are the risks?

 

If there are any additional assumptions that must be made please indicated assumptions made