Cash conversion cycle Christie Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash conversion cycle. Christie's 2012 sales (all on credit) were $287,000; its cost of goods sold is 80% of sales; and it earned a net profit of 8%, or $22,960. It tumed over its inventory 5 times during the year, and its DSO was 39 days. The firm had fixed assets totaling $40,000. Christie's payables deferral period is 50 days. Assume 365 days in year for your calculations. a. Calculate Christie's cash conversion cyde. Round your answer to two decimal places. days b. Assuming Christie holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. Round your answer to two decimal places. Total assets %24 ROA c. Suppose Christle's managers believe that the inventory turnover can be raised to 8.4 times. What would Christie's cash conversion cyde, total assets turnover, and ROA have been if the Inventory turnover had been 8.4 for 20127 Cash conversion cycle days Total assets ROA
Cash conversion cycle Christie Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash conversion cycle. Christie's 2012 sales (all on credit) were $287,000; its cost of goods sold is 80% of sales; and it earned a net profit of 8%, or $22,960. It tumed over its inventory 5 times during the year, and its DSO was 39 days. The firm had fixed assets totaling $40,000. Christie's payables deferral period is 50 days. Assume 365 days in year for your calculations. a. Calculate Christie's cash conversion cyde. Round your answer to two decimal places. days b. Assuming Christie holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. Round your answer to two decimal places. Total assets %24 ROA c. Suppose Christle's managers believe that the inventory turnover can be raised to 8.4 times. What would Christie's cash conversion cyde, total assets turnover, and ROA have been if the Inventory turnover had been 8.4 for 20127 Cash conversion cycle days Total assets ROA
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 12P: Strickler Technology is considering changes in its working capital policies to improve its cash flow...
Related questions
Question
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 2 steps
Recommended textbooks for you
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
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
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning