JB Hunt Corp. has annual sales of $80,000,000; its average inventory is $20,000,000; and its average accounts receivable is $16,000,000. The firm buys all raw materials on terms of net 35 days with cost of the good sold $180,000 per day. The firm is searching for ways to shorten the cash conversion cycle. If sales and cost of the good sold can be maintained at existing levels while lowering inventory conversion cycle by 20 days, lowering average collection period by 22 days and postponing its payable to 40 days, calculate the Exodus increase in its free cash flow after the change in its cash conversion cycle.(Please show work)
JB Hunt Corp. has annual sales of $80,000,000; its average inventory is $20,000,000; and its average accounts receivable is $16,000,000. The firm buys all raw materials on terms of net 35 days with cost of the good sold $180,000 per day. The firm is searching for ways to shorten the cash conversion cycle. If sales and cost of the good sold can be maintained at existing levels while lowering inventory conversion cycle by 20 days, lowering average collection period by 22 days and postponing its payable to 40 days, calculate the Exodus increase in its free cash flow after the change in its cash conversion cycle.(Please show work)
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 11P: Negus Enterprises has an inventory conversion period of 50 days, an average collection period of 35...
Related questions
Question
JB Hunt Corp. has annual sales of $80,000,000; its average inventory is $20,000,000; and its average accounts receivable is $16,000,000. The firm buys all raw materials on terms of net 35 days with cost of the good sold $180,000 per day. The firm is searching for ways to shorten the cash conversion cycle. If sales and cost of the good sold can be maintained at existing levels while lowering inventory conversion cycle by 20 days, lowering average collection period by 22 days and postponing its payable to 40 days, calculate the Exodus increase in its
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 3 steps with 2 images
Recommended textbooks for you
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
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 Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning