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# Working Capital Management Case Study

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Good Morning,

I'm in the process of trying to complete this team assignment for my Finance class, I am in responsible for part a and c. I finished most of part a. But I need help with part c can you assist me with this please? Thanks

3. Working Capital Management Case Study
Submit a 700-1,400-word paper including the MicrosoftÂ® ExcelÂ® worksheet, Xtreme ToysÂ® from your page, to complete the following Case Study:
Xtreme ToysÂ® is a small manufacturing company in Southern California. Management is concerned because as their sales have grown, their cash flow has shrunk. Management doesn't understand how this could happen and has approached your team to find a solution for this dilemma.
a. Part A:
Calculate the following:
1) Inventory conversion period
2) Payables deferral period
3) Receivables conversion period
4) Operating cycle
5) Cash conversion cycle (cash gap)
If the company's cost of funds is 8%, what is the annual cost of financing the cash gap?
b. Part B:
Explain to Xtreme ToysÂ® management how rising sales could cause a decrease in the company's cash position and provide three specific recommendations to management on ways to reduce the cash gap.
c. Part C:
Assume your recommendations have now resulted in Xtreme ToysÂ® being able to reduce their cash gap by 20 days. Calculate the amount of additional cash that Xtreme ToyÂ® will now have on hand and the savings on the annual cost of financing the cash gap at 8%.

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Hello,

It appears that you have correctly calculated the savings from shortening the cash gap.

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#### Solution Summary

calculated the savings from shortening the cash gap ...

\$2.49