A firm has an operating cycle of 120 days, an average collection period of 40 days, and an average payment period of 30 days. The firm’s average age of inventory is A firm has a cash conversion cycle of 80 days, an average collection period of 25 days, and an average age of inventory of 70 days. Its operating cycle is days

A firm has an operating cycle of 120 days, an average collection period of 40 days, and an average payment period of 30 days. The firm’s average age of inventory is A firm has a cash conversion cycle of 80 days, an average collection period of 25 days, and an average age of inventory of 70 days. Its operating cycle is days

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...

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A firm has an average age of inventory of 65 days, an average collection period of 45 days, and an average payment period of 30 days. The firm's cash conversion cycle is a. 110 days b. 45 days c. 75 days d. 80 days
A firm has an average age of inventory of 60 days, an average collection period of 40 days, and an average payment period of 30 days. The firm's operating cycle is?
Negus Enterprises has an inventory conversion period of 50 days, an average collection period of 35 days, and a payables deferral period of 25 days. Assume that cost of goods sold is 80% of sales. What is the length of the firm’s cash conversion cycle? If annual sales are $4,380,000 and all sales are on credit, what is the firm’s investment in accounts receivable? how many times per year does Negus Enterprises turn over its inventory?
Zane Corporation has an inventory conversion period of 64 days,an average collection period of 28 days, and a payables deferral period of 41 days.a. What is the length of the cash conversion cycle?b. If Zane’s annual sales are $2,578,235 and all sales are on credit, what is the investmentin accounts receivable?c. How many times per year does Zane turn over its inventory? Assume that the cost ofgoods sold is 75% of sales. Use sales in the numerator to calculate the turnover ratio.
The following financial information relates to XYZ Company: Inventory turnover: 5 times Accounts receivable turnover = 6 times Accounts payable turnover = 4 times XYZ gives its customers a credit period of 60 days. XYZ’s suppliers offer a credit period of 90 days. For simplicity, we assume that the year consists of 360 days. a) Calculate the operating and cash cycle for XYZ Company b) Evaluate the implications of the cash cycle for XYZ’s working capital management
National Co. has an inventory conversion period of 60 days, a receivable conversion period of 35 days, and a payable payment period of 45 days. The National Co.’s variable cost ratio is 65% and annual fixed costs of P600,000. The current cost of capital for National Co. is 12%.If National Co.’s annual sales are P3,375,000 and all sales are on credit, what is the firm’s carrying cost on accounts receivable, using 360 days year?
A company has total annual sales (all credit) of $400,000 and a gross profit margin of 20 percent. Its current assets are $80,000; current liabilities, $60,000; inventories, $30,000; and cash, $10,000. a. How much average inventory should be carried if management wants the inventory turnover to be 4? b. How rapidly (in how many days) must accounts receivable be collected if management wants to have an average of $50,000 invested in receivables? (Assume a 360-day year.)
Industria del Norte has receivable accounts of $ 42,300, inventory of $ 61,200, sales of $ 544,200, and COGS of $ 393,500. How many days on average does it take the firm to sell all of its inventory?
A company has total annual sales (all credit) of $400,000 and a gross profit margin of 20 percent. Its current assets are $80,000; current liabilities, $60,000; inventories, $30,000; and cash, $10,000. a. How much average inventory should be carried if management wants the inventory turnover to be 4? How rapidly (in how many days) must accounts receivable be collected if management wants to have an average of $50,000 invested in receivables? (Assume a 360-day year.)
Vanity Press, Inc., has annual credit sales of $1.9 million and a gross profit margin of 35 percent. Round your answers to the nearest dollar. If the firm wishes to maintain an average collection period of 60 days, what level of accounts receivable should it carry? (Assume a 365-day year.) $ The inventory turnover for this industry averages seven times. If all of Vanity’s sales are on credit, what average level of inventory should the firm maintain to achieve the same inventory turnover figure as the industry? $
The Lux Co. has an inventory conversion period of 60 days, a receivable conversion period of 35 days, and a payable payment period of 45 days. The Lux Co.’s variable cost ratio is 65% and annual fixed costs of P600,000. The current cost of capital for National Co. is 12%.If Lux Co.’s annual sales are P3,375,000 and all sales are on credit, what is the firm’s carrying cost on accounts receivable, using 360 days year?
Berry Manufacturing turns over its inventory 8 times each year, has an Average Payment Period of 35 days and has an Average Collection Period of 60 days. The firm’s annual sales are $3.5 million. Assume there is no difference in the investment per dollar of sales in inventory, receivable, and payables and that there is a 365-day year. A. Calculate the Firm’s Operating Cycle. B. Calculate the Firm’s Cash Conversion Cycle. C. Calculate the Firm’s Daily Cash Operating Expenditure.