Strickler Technology is considering changes in its working capital policiesto improve its cash flow cycle. Strickler’s sales last year were $3,250,000(all on credit), and its net profit margin was 7%. Its inventory turnover was6.0 times during the year, and its DSO was 41 days. Its annual cost of goodssold was $1,800,000. The firm had fixed assets totaling $535,000. Strickler’spayables deferral period is 45 days.a. Calculate Strickler’s cash conversion cycle.b. Assuming Strickler holds negligible amounts of cash and marketablesecurities, calculate its total assets turnover and ROA.c. Suppose Strickler’s managers believe the annual inventory turnover canbe raised to 9 times without affecting sale or profit margins. What wouldStrickler’s cash conversion cycle, total assets turnover, and ROA havebeen if the inventory turnover had been 9 for the year?
Strickler Technology is considering changes in its working capital policies
to improve its cash flow cycle. Strickler’s sales last year were $3,250,000
(all on credit), and its net profit margin was 7%. Its inventory turnover was
6.0 times during the year, and its DSO was 41 days. Its annual cost of goods
sold was $1,800,000. The firm had fixed assets totaling $535,000. Strickler’s
payables deferral period is 45 days.
a. Calculate Strickler’s cash conversion cycle.
b. Assuming Strickler holds negligible amounts of cash and marketable
securities, calculate its total assets turnover and
c. Suppose Strickler’s managers believe the annual inventory turnover can
be raised to 9 times without affecting sale or profit margins. What would
Strickler’s cash conversion cycle, total assets turnover, and ROA have
been if the inventory turnover had been 9 for the year?
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