# What is the difference between a firm’s cash cycle and its operating cycle?

01 / 10 / 2021 Assignment

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questions:

a. What is the difference between a firm’s cash
cycle and its operating cycle?

b. How will a firm’s cash cycle be affected if a
firm increases its inventory, all else being equal?

c. How will a firm’s cash cycle be affected if a
firm begins to take the discounts offered by its suppliers, all else being
equal?

4.The Greek Connection had sales of \$32 million in 2012, and a cost
of goods sold of \$20 million. A simplified balance sheet for the firm appears
below:

 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.

International House, 12 Constance Street, London, United Kingdom,
E16 2DQ

Company # 11483120

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