Answer the following questions related to investments in inventory and accounts receivable:
1.How is inventory turnover calculated?
2.Explain how inventory turnover affects the amount of cash that must be invested in inventory.
3.How is accounts receivable turnover calculated?
4.Explain how accounts receivable turnover affects the amount of cash that must be invested in accounts receivable.
5.Assuming that a company has $365 million in annual sales, and a gross margin of 20%, how much investment will each additional day of sales in inventory require?
6.Assuming that a company has $365 million in annual sales, and a gross margin of 20%, how much investment will each additional day of sales in accounts receivable require?