xyz is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash flow cycle. Christie’s 2008sales (all on credit) were $150,000; and it earned a net profit of 6%, or $9,000. It turned over its inventory 6 times during the year, and its DSO was 36.5 days. The firm had fixed assets totaling $35,000. Christie’s payables deferral period is 40days. Calculate Christie’s cash conversion cycle. Assuming Christie holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. Suppose Christie’s managers believe that the inventory turnover can be raised to 7.3 times. What would Christie’s cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 7.3 for2008?
xyz is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash flow cycle. Christie’s 2008sales (all on credit) were $150,000; and it earned a net profit of 6%, or $9,000. It turned over its inventory 6 times during the year, and its DSO was 36.5 days. The firm had fixed assets totaling $35,000. Christie’s payables deferral period is 40days. Calculate Christie’s cash conversion cycle. Assuming Christie holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. Suppose Christie’s managers believe that the inventory turnover can be raised to 7.3 times. What would Christie’s cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 7.3 for2008?
Intermediate Financial Management (MindTap Course List)
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ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter21: Supply Chains And Working Capital Management
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Problem 12P: Strickler Technology is considering changes in its working capital policies to improve its cash flow...
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xyz is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash flow cycle. Christie’s 2008sales (all on credit) were $150,000; and it earned a net profit of 6%, or $9,000. It turned over its inventory 6 times during the year, and its DSO was 36.5 days. The firm had fixed assets totaling $35,000. Christie’s payables deferral period is 40days.
- Calculate Christie’s cash conversion cycle.
- Assuming Christie holds negligible amounts of cash and marketable securities, calculate its total assets turnover and
ROA . - Suppose Christie’s managers believe that the inventory turnover can be raised to 7.3 times. What would Christie’s cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 7.3 for2008?
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