Edison Inc. has annual sales of $36,500,000. The firm's cost of goods sold is 75% of sales. On average, the company has $9,000,000 in inventory and $8,000,000 in accounts receivable. The firm is looking for ways to shorten its cash conversion cycle (CCC). Its CFO has proposed new policies that would result in a 20% reduction in both average inventory and accounts receivable. She also anticipates that these policies would reduce sales by 10% while the payables deferral period would remain unchanged at 35 days. What effect would these policies have on the CCC?

Q: Kiley Corporation had the following data for the most recent year (in millions). The new CFO…

A: Cash Conversion Cycle (CCC): It Includes the days allowed to debtors, days take by inventory…

Q: CCC Corp. has annual turnovers of inventory, receivables, and payables of 12,18, 8 respectively.…

A: Ratio Analysis - The ratio is the technique used by the prospective investor or an individual or…

Q: Williams & Sons last year reported sales of $23 million, cost of goods sold (COGS) of $16 million,…

A: Given, Sales = $23 million COGS = $16 million Inventory turnover = 4 times Inventory Turnover (New…

Q: The King Carpet Company has $2,910,000 in cash and a total of $12,780,000 in current assets. The​…

A: The plan to reduce cash would have impact on both current assets and current liabilities which would…

Q: Logan Manufacturing currently has $1,000,000 in accounts receivable. Its days sales outstanding…

A: Ratio analysis is a method of measuring the financial position of the organization with different…

Q: A firm is considering several policy changes to increase sales. It will increase the variety of…

A: Given: Increase in inventory=$11900Increase in average receivables =$68800Increase in sales=$819000…

Q: A firm is considering several policy changes to increase sales. It will increase the variety of…

A: Change in Cash conversion cycle =  Days of inventory outstanding + DSO - DPO   Days of inventory…

Q: A firm is considering several policy changes to increase sales. It will increase the variety of…

A: The cash cycle consists of the inventory period plus the account receivable period minus the account…

Q: Your company collected $304.00 million and spent $377.00 million this month. If previous month's…

A: The cash balance at the end of the month is a function of collections and disbursements made during…

Q: 365-day year. He believes he can reduce the average inventory to $627,465 with no effect on sales.…

A: inventory conversion period =Average inventory/ Cost of goods sold x 365 Cost of goods sold…

Q: Brown Corporation had average days of sales outstanding of 19 days in the most recent fi scal year.…

A: Average days sales outstanding = (Average Receivables/Average credit sales) x 365 Average…

Q: Aqua Corp. is considering a change in marketing strategy which would cost $100,000 per year…

A: The cash conversion cycle shows that how effectively the company's managers deal with their working…

Q: Primrose Corp has $15 million of sales, $2 million of inventories, $3 million of receivables, and $1…

A: Cash conversion cycle can be calculated by using this equation CCC = Inventory conversion period +…

Q: Williams & Sons last year reported sales of $73 million, cost of goods sold (COGS) of $60 million,…

A: The inventory turnover ratio has increased which shows that the company is selling the goods…

Q: National Co. has annual credit sales of P4 million. Its average collection period is 40 days and bad…

A: Under Receivable Management in Financial Managent, credit period is stringent if it is beneficial to…

Q: Kiley Corporation had the following data for the most recent year (in millions). The new CFO…

A: Calculation of cash conversion cycle: Answer: Cash conversion cycle is 34.01 days. So, CCC is…

Q: BMC Co. has an average A/R balance of P1,250,000, average inventory balance of P1,750,000, and…

A: Cash conversion cycle helps in measuring how long a company will be deprived of cash if in order to…

Q: Brown Corporation had average days of sales outstanding of 19 days in the most recent fi scal year.…

A: Accounts receivable: Accounts receivable refers to the amounts to be received within a short period…

Q: Ingraham Inc. currently has $205,000 in accountsreceivable, and its days sales outstanding (DSO) is…

A: Calculate the current sales as shown below: Hence, the current sales are $1,053,873.239.

Q: Bulldogs Inc. has a normal operating cycle of 32 days and cash conversion cycle of 25 days. Which of…

A: Formula -  Cash operating cycle =  The no. Of inventory days  + Receivable days - payable Days

Q: BMC Co. has an average A/R balance of P1,250,000, average inventory balance of P1,750,000, and…

A: The cash conversion cycle helps to measure the time taken by business to convert its inventory…

Q: If a firm has sales of $22,242,000 a year, and the average collection period for the industry is 35…

A: Given that;Yearly sales is $22,242,000Average collection period for the industry is 35 days and the…

Q: CCC Corp. has annual turnovers of inventory, receivables, and payables of 12, 18, 8 respectively.…

A: Difference in cash conversion cycle = cash conversion cycle of CCC Corporation - Cash conversion…

Q: Libscomb Technologies' annual sales are $5,024,963 and all sales are made on credit, it purchases…

A: Cash cycle = Days inventory outstanding + days sales outstanding - days payable outstanding Days…

Q: Frosty Corp. has a minimum cash balance of PHP 100,000 and forecasted sales of PHP 1,000,000.…

A: Accounts receivables = 5% of sales = 5% x PHP 1,000,000 = PHP 50,000

Q: Edwards Industries has $320 million in sales. The companyexpects that its sales will increase 12%…

A: Sales Forecast: Sales forecast is the important point that arises while making the future plans. The…

Q: Williams & Sons last year reported sales of $39 million, cost of goods sold (COGS) of $30 million,…

A: Inventory turnover ratio can be calculated by cost of goods sold divided by average inventory.

Q: & Sons last year reported sales of $12 million, cost of goods sold (COGS) of Inventory Management…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Henderson Office Supply is considering a more liberal credit policy to increase sales but expects…

A: Inventory Turnover shows how much times investment made is converted into sales. It is calculated to…

Q: Brown Corporation had average days of sales outstanding of 19 days in the most recent fi scal year.…

A: Formula: Average days sales outstanding=Average ReceivablesAverage credit sales x 365  Average…

Q: a) Kareem & Sons last year reported sales of 12 million and an inventory turnover ratio of 4. The…

A: Inventory = Sales/ Inventory turnover ratio  Accounts receivable = DSO * Average Day Sales

Q: National Co. has an inventory conversion period of 60 days, a receivable conversion period of 35…

A: The Cash Conversion Cycle (CCC) is one of the various quantitative indicators that may be used to…

Q: b) Medwing Corporation has a DSO of 19 days. The company averages 5,500 in credit sales each day.…

A: Answer b: Average amount of receivables=Sales×DSO360=$5,500×19360=$290.28

Q: Kareem & Sons last year reported sales of 12 million and an inventory turnover ratio of 4. The…

A: “Hey, since there are multiple questions posted, we will answer first question. If you want any…

Q: Your company collected $340.00 million and spent $381.00 million this month. If previous month's…

A: The cash budget is prepared to estimate the cash surplus or shortage during the period.

Q: Libscomb Technologies' annual sales are $5,851,355 and all sales are made on credit, it purchases…

A: Cash Cycle in days = Inventory Holding Period + Accounts receivable collection period - Accounts…

Q: Ingraham Inc. currently has $500,000 in accounts receivable, and its days sales outstanding (DSO) is…

A: Formula of Days sales outstanding is as follows: Days sales outstanding =Average accounts…

Q: Kiley Corporation had the following data for the most recent year (in millions). The new CFO…

A: Given, Average inventory = $4000 Improve in the credit department could reduce receivables =$2000…

Q: Your consulting firm was recently hired to improve the performance of Realyou Inc, which is highly…

A: Average days in inventory = 365 / Inventory turnover ratio Average days in receivables = 365 /…

Q: 3. Margetis Inc. carries an average inventory of $750,000. Is annual sales are S10 million, its cost…

A: Cash conversion cycle (CCC) is the  number of days a firm takes to purchase inventory and convert…

Q: Williams & Sons last year reported sales of $38 million, cost of goods sold (COGS) of $30 million,…

A: Inventory Turnover ratio is the rate at which a company sells and then replaces its inventory in a…

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.