Lakes LLC has $13 million of sales, $2 million of inventories, $2 million of receivables, and $2 million of payables. Its cost of goods sold is 85% of sales, and it finances working capital with bank loans at an 7% rate. Assume 365 days in year for your calculations. Do not round intermediate steps.
What is Lakes's cash conversion cycle (CCC)?
If Lakes could lower its inventories and receivables by 7% each and increase its payables by 7%, all without affecting sales or cost of goods sold, what would be the new CCC? Do not round intermediate calculations. Round your answer to two decimal places.
How much cash would be freed up, if Lakes could lower its inventories and receivables by 7% each and increase its payables by 7%, all without affecting sales or cost of goods sold?
By how much would pretax profits change, if Lakescould lower its inventories and receivables by 7% each and increase its payables by 7%, all without affecting sales or cost of goods sold?