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Calculate The Greek Connection’s net working capital in 2012. b. Calculate the cash conversion cycle of The Greek Connection in 2012. c. The industry average accounts receivable days is 30 days. What would the cash conversion cycle for The Greek Conne

THE GREEK CONNECTION

Balance Sheet

As of December 31, 2012 (in $ thousand)

Assets

Liabilities and Equity

Cash

Accounts receivable

Inventory

$ 2,000

3,950

1,300

Accounts payable

Notes payable

Accruals

$ 1,500

1,000

1,220

Total current assets

$ 7,250

Total current liabilities

Long-term debt

$ 3,720

3,000

Net plant, property,

and equipment

$ 8,500

Total liabilities

Common equity

$ 6,720

9,030

Total assets

$ 15,750

Total liabilities and equity

$ 15,750

a. Calculate The Greek Connection’s net working capital in 2012.

b. Calculate the cash conversion cycle of The Greek Connection in 2012.

c. The industry average accounts receivable days is 30 days. What would the cash conversion cycle for The Greek Connection have been in 2012 if it had matched the industry average for accounts receivable days?

5.Assume the credit terms offered to your firm by your suppliers are 3/5, Net 30. Calculate the cost of the trade credit if your firm does not take the discount and pays on day 30.


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