INTERMEDIATE FINAN.MGMT.(LL)-W/MINDTAP
14th Edition
ISBN: 9780357533611
Author: Brigham
Publisher: CENGAGE L
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Chapter 21, Problem 12P
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
ROA . - 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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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.
(16-12)
Working Capital
Cash Flow Cycle
a. Calculate Strickler's cash conversion cycle.
b. Assuming Strickler holds negligible amounts of cash and marketable securities,
calculate its total assets turnover and ROA.
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 turnove
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 ROA.
c. Suppose Strickler’s managers believe the annual inventory turnover can be raised to
9 times without affecting sales. What would Strickler’s cash conversion cycle, total assets
turnover, and ROA have been 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.
Calculate Strickler’s cash conversion cycle.
Assuming Strickler holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA.
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?
Chapter 21 Solutions
INTERMEDIATE FINAN.MGMT.(LL)-W/MINDTAP
Ch. 21 - a. Working capital; net working capital; net...Ch. 21 - Prob. 2QCh. 21 - Is it true that, when one firm sells to another on...Ch. 21 - What are the four elements of a firm’s credit...Ch. 21 - Prob. 5QCh. 21 - Prob. 6QCh. 21 - Prob. 7QCh. 21 - Is it true that most firms are able to obtain some...Ch. 21 - What kinds of firms use commercial paper?Ch. 21 - Prob. 1P
Ch. 21 - Medwig Corporation has a DSO of 17 days. The...Ch. 21 - What are the nominal and effective costs of trade...Ch. 21 - A large retailer obtains merchandise under the...Ch. 21 - A chain of appliance stores, APP Corporation,...Ch. 21 - Prob. 6PCh. 21 - Calculate the nominal annual cost of nonfree trade...Ch. 21 - Prob. 8PCh. 21 - Grunewald Industries sells on terms of 2/10, net...Ch. 21 - The D.J. Masson Corporation needs to raise...Ch. 21 - Negus Enterprises has an inventory conversion...Ch. 21 - Strickler Technology is considering changes in its...Ch. 21 - Dorothy Koehl recently leased space in the...Ch. 21 - Suppose a firm makes purchases of $3.65 million...Ch. 21 - The Thompson Corporation projects an increase in...Ch. 21 - The Raattama Corporation had sales of $3.5 million...Ch. 21 - Karen Johnson, CFO for Raucous Roasters (RR), a...Ch. 21 - Prob. 2MCCh. 21 - Prob. 3MCCh. 21 - Prob. 4MCCh. 21 - Prob. 5MCCh. 21 - Prob. 6MCCh. 21 - Prob. 7MCCh. 21 - Prob. 8MCCh. 21 - What is the impact of higher levels of accruals,...Ch. 21 - Prob. 10MCCh. 21 - Prob. 11MCCh. 21 - Prob. 12MCCh. 21 - Prob. 13MCCh. 21 - Prob. 14MCCh. 21 - Prob. 15MCCh. 21 - Prob. 16MC
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