Q7 Brentwood Enterprises have asked for your assistance, providing details on the short-term financial position
and financial planning of the company. The following information is provided;
Average inventory: $1,184,000
Average receivables: $1,809,600
Average payables: $768,000
Net sales: $13,950,000
Cost of Goods Sold: $8,400,000
a) Calculate the Operating Cycle and the Cash Cycle (in days)?
b) What are the differences between Flexible and Restrictive short-term financial policies?
c) What factors need to be considered when choosing a financial policy? Explain what a Compromise Policy is.