Cash and marketable securities $50,000 $50,000
Accounts receivable 300,000 350,000
Inventories 350,000 500,000
Total current assets $700,000 $900,000
Accounts payable $200,000 $250,000
Bank loan 0 150,000
Accruals 150,000 200,000
Total current liabilities $350,000 $600,000
1) Given Robinson’s 2010 and 2011 financial information presented
a) find out its operating and cash conversion cycle in each year.
b) Determine Robinson’s net investment in working capital each year?
2) Robinson expects its 2012 sales and cost of goods sold to grow by 5% over their 2011 levels.
a) What will be affect on its levels of inventories, receivables, and payments if components of its cash conversion cycle remain at their 2011 levels? Determine its net investment in working capital?
b) Determine the impact on its net investment in working capital in 2012 if Robinson is able to decrease its collection period by five days, its inventory period by six days, and rise its payment period by two days?