Question content area top Part 1 Multiple changes in cash conversion cycle Garrett Industries turns over its inventory

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Question content area top
Part 1
Multiple changes in cash conversion cycle   Garrett Industries
turns over its inventory
7
times each​ year; it has an average collection period
of
41
days and an average payment period of
25
days. The​ firm's annual sales are
​$3.3
million. Assume there is no difference in the investment per
dollar of sales in​ inventory, receivables,
and​ payables; and a
365​-day
year.a. Calculate the​ firm's cash conversion
cycle​,
its daily cash operating​ expenditure, and the amount of
resources needed to support its cash conversion cycle.
b.  Find the​ firm's cash conversion cycle and resource
investment requirement if it makes the following changes
simultaneously.
​(1) Shortens the average age of inventory by
4
days.​(2) Speeds the collection of accounts receivable by an
average of
10
days.​(3) Extends the average payment period by
8
days.c.  If the firm pays
16​%
for its resource​ investment, by how​ much,
if​ anything, could it increase its annual profit as a result
of the changes in part
b​?
d.  If the annual cost of achieving the profit in part c is
​$34,000​,
what action would you recommend to the​ firm?
​ Why?
Question content area bottom
Part 1
a. The​ firm's cash conversion​ cycle, CCC, is
enter your response here
days. ​ (Round to the nearest whole​ day.)
Part 2
The​ firm's daily cash operating expenditure is
​$enter your response here.
​ (Round to the nearest​ dollar.)
Part 3
The amount of resources needed to support the​ firm's cash
conversion cycle is
​$enter your response here.
​ (Round to the nearest​ dollar.)
Part 4
b.  Find the​ firm's cash conversion cycle and resource
investment requirement if it makes the following changes
simultaneously.
​(1) Shortens the average age of inventory by
4
days.​(2) Speeds the collection of accounts receivable by an
average of
10
days.​(3) Extends the average payment period by
8
days.
Part 5
The new cash conversion​ cycle, CCC,
enter your response here
days. ​ (Round to the nearest whole​ day.)
Part 6
The new amount of resources needed to support the​ firm's
cash conversion cycle is
​$enter your response here.
​ (Round to the nearest​ dollar.)
Part 7
c.  If the firm pays
16​%
for its resource​ investment, it could increase its annual
profit as a result of the changes in part b by  
​$enter your response here.
​ (Round to the nearest​ dollar.)
Part 8
d.  If the annual cost of achieving the profit in part c is
​$34,000​,
what action would you recommend to the​ firm?
Why?  ​(Select the best answer​ below.)
A.
The firm should reject the proposed changes because the increase
in profits exceeds the additional costs.
B.
The firm should reject the proposed changes because the additional costs exceed the increase in profits.
C.
The firm should accept the proposed changes because the increase
in profits are less than the additional costs.
D.
The firm should accept the proposed changes because the increase in profits exceeds the additional costs.