Seneca Inc. had the following data for 2010 (in millions). The new CFO believes that the company could improve its working capital management sufficiently to bring its NWC and CCC up to the benchmark companies' level without affecting either sales or the costs of goods sold. Seneca finances its net working capital with a bank loan at an 8% annual interest rate, and it uses a 365-day year. If these changes had been made, by how much would the firm's pre-tax income have increased?
Acc Variables Base Level ($) Base Level CCC Benchmark CCC Benchmark ($)
Need to find:
Sales $100,000
COGS $ 80,000
Inventory $20,000 91.25 38.00
Acc Rec $16,000 58.40 20.00
Payables $ 5,000 22.81 30.00
Totals 126.84 28.00
Click here for the solution: Seneca Inc. had the following data for 2010 (in millions)
