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Adrianna’s Apples and Pie

Adrianna’s Apples and Pies is a large bakery. It mainly bakes elaborate cakes for weddings and similar functions. The company buys its raw materials every seven days and pays cash on delivery. The company usually sells all its stock within seven days. Its customers are required to pay for the cakes within 15 days of their order.

 

  1. Calculate the firm’s cash conversion cycle. (20 points)
  2. Is its CCC positive or negative? (10 points)
  3. Can you suggest how Adrianna’s Apples and Pies could improve its CCC? (30 points)
  4. Does the business need short-term debt to cover its day-to-day operations? If so, what sort of short-term debt do you recommend, and why? (40 points)

Skills

  • Examine working capital management approaches and policies.
  • Consider the cash conversion cycle and the impact of managing inventory, accounts receivable, and accounts payable.
  • Evaluate sources of, and requirements for, obtaining short-term debt.

 

Last Updated on April 28, 2019

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