Robinson expects its 2012 sales and cost of goods sold to grow by 20 percent over their 2011 levels.
a. What will be the affect on its levels of receivables, inventories, and payments if the components of its cash conversion cycle remain at their 2011 levels? What will be its net investment in working capital?
b. What will be the impact on its net investment in working capital in 2012 if Robinson is able to reduce its inventory period by ten days?
a. All components grow by 20 percent. So receivables, inventories and payments and net investment in working capital will be by 20% bigger then in 2011. b. it will be positive impact but numerical expression depends on part of inventory and level of change.