The Prestipino Corporation is a leading U.S Producer of automobile batteries. Prestipino turns out 1,500 batteries a day at a cost of $6 per battery for materials and labour. It takes the firm 22 days to convert raw materials into a battery. They allow their customers 40 days to pay, and the firm generally pays its suppliers in 30 days.
(a) What is the length of Prestipino’s cash conversion cycle?
(b) At a steady state in which Prestipino produces 1,500 batteries a day, what amount of working capital must it finance?
