P15-3: multiple changes in cash conversion cycle garrett industries turns over its inventory 6 times each year; it has an average collection period of 45 days and an average pay-ment period of 30 days. the firm’s annual sales are $3 million. assume there is no difference in the investment per dollar of sales in inventory, receivables, and pay-ables, and assume 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 5 days.(2) speeds the collection of accounts receivable by an average of 10 days.(3) extends the average payment period by 10 days. c. if the firm pays 13% 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 $35,000, what action would you recommend to the firm? why?

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Uppose that the federal reserve purchases a bond for $100,000 from donald truck, who deposits the proceeds in the manufacturer’s national bank. what will be the impact of this purchase on the supply of money? the money supply will increase by $100,000. the money supply will increase by $80,000. the money supply will increase by $500,000. this action will have no effect on the money supply. if the reserve requirement ratio is 20 percent, what is the maximum amount of additional loans that the manufacturer’s bank will be able to extend as the result of truck’s deposit? the maximum additional loans is $100,000. the maximum additional loans is $80,000. the maximum additional loans is $20,000. the maximum additional loans is $500,000. given the 20 percent reserve requirement, what is the maximum increase in the quantity of checkable deposits that could result throughout the entire banking system because of the fed’s action? this action will have no effect on the money supply. the money supply will eventually increase by $80,000. the money supply will eventually increase by $500,000. the money supply will eventually increase by $100,000.

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