FIN 512 WEEK 2 answer key Essay

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FI 512 Week 2 Answer Key Chapter 3 1. [Business Organization and Intellectual Property] Phil Young, founder of the Pedal Pushers Company, has developed several prototypes of a pedal replacement for children’s bicycles. The Pedal Pusher will replace existing bicycle pedals with an easy release stirrup to help smaller children hold their feet on the pedals. The Pedal Pusher will glow in the dark and will provide a musical sound as the bicycle is pedaled. Phil plans to purchase materials for making the product from others, assemble the products at the venture’s facilities, and hire product sales representatives to sell the Pedal Pushers through local retail and discount stores that sell children bicycles. Phil will need to…show more content…
Chapter 5 8. [Cash Conversion Cycle] Castillo Products Company, described in Problem 7, improved its operations from a net loss in 2009 to a net profit in 2010. While the founders, Cindy and Rob Castillo, are happy about these developments, they are concerned with trying to understand how long the firm takes to complete its cash conversion cycle in 2010. Use the financial statements from Problem 7 to make your calculations. Balance sheet items should reflect the averages of the 2009 and 2010 accounts. A. Calculate the inventory-to-sale conversion period for 2010. Inventory-to-Sale Conversion Period = Avg. Inventory/Avg. Daily COGS = (($400,000 + $500,000)/2)/($900,000/365) = 182.50 days B. Calculate the sale-to-cash conversion period for 2010. Sale-to-Cash Conversion Period = Avg. Receivables/Avg. Daily Sales = (($200,000 + $280,000)/2)/($1,500,000/365) = 58.40 days A. Calculate the purchase-to-payment conversion period for 2010. Purchase-to-Payment Conversion Period = (Avg. Payables + Avg. Accruals)/Avg. Daily CGS = (($130,000 + $160,000)/2 + ($50,000 + $70,000)/2)/($900,000/365) = 83.14 days B. Determine the length of the Castillo Product’s cash conversion cycle for 2010. Length of the Cash Conversion Cycle = (Inventory-to-Sale Conversion Period) + (Sales-to-cash Conversion Period) – (Purchase-to-Payment Conversion Period) = 182.50 days +

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