2. Tortellini Inc. payables policy is being revised. It has an annual overall sales of P50,735,000, an inventory level of P15,012,000, and an accounts receivable of P10,008,000. The cost of goods sold for the company is 85 percent of sales. All transactions are made on credit, and payments are always made on the 30th day. However, it now intends to fully use trade credit and pay its suppliers on the 40th day. The CFO also assumes that sales can be sustained at the current pace, but inventory and accounts receivable can be reduced by P1,946,000 and P1,946,000, respectively. What would be the net change in the cash conversion cyele if the year is 365 days long?
2. Tortellini Inc. payables policy is being revised. It has an annual overall sales of P50,735,000, an inventory level of P15,012,000, and an accounts receivable of P10,008,000. The cost of goods sold for the company is 85 percent of sales. All transactions are made on credit, and payments are always made on the 30th day. However, it now intends to fully use trade credit and pay its suppliers on the 40th day. The CFO also assumes that sales can be sustained at the current pace, but inventory and accounts receivable can be reduced by P1,946,000 and P1,946,000, respectively. What would be the net change in the cash conversion cyele if the year is 365 days long?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter21: Supply Chains And Working Capital Management
Section: Chapter Questions
Problem 11P: Negus Enterprises has an inventory conversion period of 50 days, an average collection period of 35...
Related questions
Question
Please answer the questions What would be the net change in the cash conversion cycle if the year is 365 days long? Answer it with complete solutions and explanations if needed. Thank you
Transcribed Image Text:2. Tortellini Inc. payables policy is being revised. It has an annual overall sales of
P50,735,000, an inventory level of P15,012,000, and an accounts receivable of
P10,008,000. The cost of goods sold for the company is 85 percent of sales. All
transactions are made on credit, and payments are always made on the 30th day. However,
it now intends to fully use trade credit and pay its suppliers on the 40th day. The CFO
also assumes that sales can be sustained at the current pace, but inventory and accounts
receivable can be reduced by P1,946,000 and P1,946,000, respectively. What would be
the net change in the cash conversion cycle if the year is 365 days long?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
