You have recently been hired to improve the performance of Multiplex Corporation, which has been experiencing a severe cash shortage. As one part of your analysis, you want to determine the firm’s cash conversion cycle. Using the following information and a 365-day year, (a) what is your estimate of the firm’s current cash conversion cycle? Current inventory = $241,000.00 • Annual sales = $1,200,000.00 • Accounts receivable = $300,000.00 • Accounts payable = $245,000.00 • Total annual purchases = $600,000.00 • Purchases credit terms: net 30 days. • Receivables credit terms: net 50 days.
You have recently been hired to improve the performance of Multiplex Corporation, which has been experiencing a severe cash shortage. As one part of your analysis, you want to determine the firm’s cash conversion cycle. Using the following information and a 365-day year, (a) what is your estimate of the firm’s current cash conversion cycle? Current inventory = $241,000.00 • Annual sales = $1,200,000.00 • Accounts receivable = $300,000.00 • Accounts payable = $245,000.00 • Total annual purchases = $600,000.00 • Purchases credit terms: net 30 days. • Receivables credit terms: net 50 days.
Chapter16: Supply Chains And Working Capital Management
Section: Chapter Questions
Problem 11P
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You have recently been hired to improve the performance of Multiplex Corporation, which has been experiencing a severe cash shortage. As one part of your analysis, you want to determine the firm’s cash conversion cycle. Using the following information and a 365-day year,
(a) what is your estimate of the firm’s current cash conversion cycle?
| Current inventory = | $241,000.00 |
| • Annual sales = | $1,200,000.00 |
| • Accounts receivable = | $300,000.00 |
| • Accounts payable = | $245,000.00 |
| • Total annual purchases = | $600,000.00 |
| • Purchases credit terms: net 30 days. | |
| • Receivables credit terms: net 50 days. |
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