Business operating cycle. Stewart and Company currently has a production cycle of 33 days, a collection cycle of 17 days, and a payment cycle of 14 days. What are Stewart's current business operating cycle and cash conversion cycle? If Stewart and Company wants to reduce its cash conversion cycle to 29 days, what action can it take? What is Stewart's current business operating cycle? days (Round to the nearest whole number.) What is Stewart's current cash conversion cycle? days (Round to the nearest whole number.) If Stewart and Company wants to reduce its cash conversion cycle to 29 days, what action can it take? (Select the best response.) O A. The firm can decrease the production cycle by 7, decrease the collection cycle by 7, increase the payment cycle by 7, or some combination of the three. O B. The firm can increase the production cycle by 7, increase the collection cycle by 7, decrease the payment cycle by 7, or some combination of the three.

Business operating cycle. Stewart and Company currently has a production cycle of 33 days, a collection cycle of 17 days, and a payment cycle of 14 days. What are Stewart's current business operating cycle and cash conversion cycle? If Stewart and Company wants to reduce its cash conversion cycle to 29 days, what action can it take? What is Stewart's current business operating cycle? days (Round to the nearest whole number.) What is Stewart's current cash conversion cycle? days (Round to the nearest whole number.) If Stewart and Company wants to reduce its cash conversion cycle to 29 days, what action can it take? (Select the best response.) O A. The firm can decrease the production cycle by 7, decrease the collection cycle by 7, increase the payment cycle by 7, or some combination of the three. O B. The firm can increase the production cycle by 7, increase the collection cycle by 7, decrease the payment cycle by 7, or some combination of the three.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter17: The Management Of Cash And Marketable Securities

Section: Chapter Questions

Problem 2P

See similar textbooks

Similar questions

The following four suggestions have been made to improve the company’s cash position. Evaluate the effect on cash flow for each of the four suggestions. After evaluating each suggestion, enter the projected cash balances in the spaces provided. Consider each suggestion separately. Reset cells to their initial values after each new suggestion. Seek agreement with suppliers to extend the credit period to 30 days. This would mean that all current monthly purchases would be paid for in the following month. Raise the unit price from $28 to $30. A price increase will reduce unit sales by 10% each month. Unit purchases will also be reduced by 10%. Put the company’s two salespeople on straight commission. This would reduce fixed marketing and administrative costs to $1,500 per month and raise variable marketing and administrative costs to $7 per unit. Increase the cash discount from 5% to 10%. It is anticipated that this would increase the percentage of customers paying within the discount period to 85%, and those paying the month after the discount period would drop to 8%. Five percent would pay in the following month and 2% would still be uncollectible. What are your recommendations for Sweet Pleasures, Inc.? Consider potential impact on profits as well as cash balances.
American Products is concerned about managing cash efficiently. On average, inventories have an age of 90 days, and accounts receivable are collected in 60 days. Accounts payable are paid approximately 30 days after they arise. The firm’s operating-cycle investments are $30 million per year.Cost of goods sold are $20 million, and purchases are $15 million. a. Calculate the firm’s operating cycle. b. Calculate the firm’s cash conversion cycle. c. Calculate the amount of resources needed to support the firm’s cash conversion cycle. d. Discuss how management might be able to reduce the cash conversion cycle.
Brothers Breads has the following data. What is the firm's cash conversion cycle? Inventory conversion period = 50 days Average collection period = 17 days Payables deferral period = 25 days a. 46 days b. 31 days c. 42 days d. 38 days e. 34 days
American Products is concerned about managing cash efficiently. On the average, inventories have an age of 90 days, and accounts receivable are collected in 60 days. Accounts payable are paid approximately 30 days after they arise. The firm has annual sales of about $30 million. Assume there is no difference in the investment per dollar of sales in inventory, receivables, and payables and that there is a 365-day year. a) Calculate the firm’s operating cycle. b) Calculate the firm’s cash conversion cyclec) Calculate the amount of resources needed to support the firm’s cash conversion cycle.
Your boss asks you to compute your company's cash conversion cycle. Looking at the financial statements, you see that the average inventory for the year was $24,800, accounts receivable averaged $18,700, and accounts payable averaged $16,100. You also see that the company had sales of $138,000 and that cost of goods sold was $110,400. Calculate firm's cash conversion cycle. (Use 365 days for calculation. Round intermediate calculations and final answer to 1 decimal place, e.g. 15.1.)
A firm has an average age of inventory of 100 days, an average collection period of 40 days, and an average payment period of 30 days. The firm's cash conversion cycle is?
Bulldogs Inc. has a normal operating cycle of 32 days and cash conversion cycle of 25 days. Which of the following must be true if the company wants to shorten its cash conversion cycle to 20 days? Decrease the operating profit by 2% Increase the age of inventory by 5 day Increase the accounts payable deferral period by 2 days Decrease the days sales outstanding by 5 days
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. How much resources must be invested to support its Cash Conversion Cycle? B. If the firm pays 14% for these resources, by how much would it increase its annual profits by favorably changing its Current Cash Conversion Cycle by 20 days.
Cash conversion cycle American Products is concerned about managing cash effi-ciently. On average, inventories have an age of 80 days, and accounts receivable are collected in 40 days. Accounts payable are paid approximately 30 days after they arise. The firm has annual sales of about $30 million. Goods sold total $20 million, and purchases are $15 million. c. Calculate the amount of resources needed to support the firm’s cash conversion cycle?
You have recently been hired to improve the performance of Multiplex Corporation, which has been experiencing a severe cash shortage. As one part of your analysis, you want to determine the firm’s cash conversion cycle. Using the following information and a 365-day year,(a) what is your estimate of the firm’s current cash conversion cycle? Current inventory = $241,000.00 • Annual sales = $1,200,000.00 • Accounts receivable = $300,000.00 • Accounts payable = $245,000.00 • Total annual purchases = $600,000.00 • Purchases credit terms: net 30 days. • Receivables credit terms: net 50 days.
CCC Corp. has annual turnovers of inventory, receivables, and payables of 12,18, 8 respectively. Industry average for average ages are 35 days, 25 days, and 40 days for inventories, receivables and payables? What is the difference of the cash conversion cycle of CCC compared to the industry? Use 360 days.
The financial manager of Sarap Corporation wants to determine the amount of cash outlays to be spent for the next period. He asked the help of the accountant and the latter provided a cash budget for the next year. According to the computations, the company would be incurring cash expenses of P6,612,500 per month. The financial manager has estimated a cost of P40 per transaction in case non-cash asset is converted to cash. The firm's opportunity cost ratio is 12%. a. The optimum cash balance is?