Company X reported the following information for the last fiscal year. COMPANY X Assets As of Liabilities and Equity 12/31/2021 Inventories USD 200 000
Company X reported the following information for the last fiscal year. COMPANY X Assets As of Liabilities and Equity 12/31/2021 Inventories USD 200 000
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter11: The Statement Of Cash Flows
Section: Chapter Questions
Problem 12MCQ: Smoltz Company reported the following information for the current year: cost of goods sold,...
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Question
Cash conversion cycle: Company X reported the following information for the last fiscal
year.
COMPANY X | |||
Assets | As of | Liabilities and Equity | |
12/31/2021 | |||
Inventories | USD 200 000 | ||
Accounts Receivable | 180 000 | Borrowings | USD 190 000 |
Cash and financial assets | 25 000 | Accounts payable and | 200 000 |
available for sale | accruals | ||
Other current assets | 18 000 | ||
Total current assets | USD 423 000 | Total current liabilities | USD 390 000 |
Fixed Assets | 500 000 | Long-term debt | 150 000 |
Equity | 383 000 | ||
Total Assets | USD 923 000 | Total Liabilities & | USD 923 000 |
Equities | |||
Net sales (credit) | USD 800 000 | ||
Cost of goods sold | 380 000 |
a. Calculate the firm’s cash conversion cycle and operating cycles
b. What is the financing strategy of Company X? Aggressive or conservative? Is the strategy
already proper enough for the company? Please give your recommendation for them!
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