CDL Corporation produces motorcycle batteries. CDL turns out 1,500 bat

QUESTION

CDL Corporation produces motorcycle batteries. CDL turns out 1,500 batteries a day at a cost of $5 per battery for materials and labor. It takes the firm 24 days to convert raw materials into a battery. CDL allows its customers 40 days in which to pay for the batteries, and the firm generally pays i
a. Cash conversion cycle = 22 40 30 = 32 days. b. Working capital financing = 1,500 X 32 X $6 = $288,000. c. If the payables deferral period was increased by 5 days, then its cash conversion cycle would decrease by 5 days, so its working capital financing needs would

ecrease by Decrease in working capital financing = 1,500X 5 X $6 = $45,000. d. Cash conversion cycle = 20 40 30 = 30 days. Working capital financing = 1,800 X 30 X $7 = $378,000.

ANSWER:

CLICK REQUEST FOR  AN EXPERT SOLUTION