Answered: anagement sufficiently to bring its NWC…

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter6: Receivables And Inventories

Section: Chapter Questions

Problem 6.19E: Inventory on the balance sheet Based on thy data in Exercise 6-18 and assuming that cost was...

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Question

Manalo Inc. had the following data for 2019 (in millions). The new CFO believes that the company could improve its working capital management sufficiently to bring its NWC and CCC up to the benchmark companies' level without affecting either sales or the costs of goods sold. Manalo finances its net working capital with a bank loan at an 8% annual interest rate, and it uses a 365-day year. If these changes had been made, by how much would the firm's pre-tax income have increased?

Original
Benchmark
Data
Related CCC
ССС
Sales
P100,000
Cost of goods sold
Inventory (ICP)
Receivables (DSO)
Payables (PDP)
P80,000
P20,000
91.25
38.00
P16,000
58.40
20.00
P5,000
22.81
30.00
126.84
28.00

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