As an operations management consultant, you have been asked to evaluate a furniture manufacturer's cash-to-cash conversion cycle under the following assumptions: sales of $24 million, cost of goods sold of $22.7 million, 50 operating weeks a year, total average on hane inventory of $2,050,000, accounts receivable equal to $2,470,000, and accounts payable of $3,735,000. What is the cash-to-cash conversion cycle in weeks? Do not round intermediate calculations. Round your answer to one decimal place.

As an operations management consultant, you have been asked to evaluate a furniture manufacturer's cash-to-cash conversion cycle under the following assumptions: sales of $24 million, cost of goods sold of $22.7 million, 50 operating weeks a year, total average on hane inventory of $2,050,000, accounts receivable equal to $2,470,000, and accounts payable of $3,735,000. What is the cash-to-cash conversion cycle in weeks? Do not round intermediate calculations. Round your answer to one decimal place.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 12P

See similar textbooks

Similar questions

A bookstore is planning to purchase an automated inventory/remote marketing system, which includes an upgrade to a more sophisticated cash register system. The package has an initial investment cost of $360,000. It is expected to generate $144,000 of annual cash flows, reduce costs and provide incremental cash revenues of $326,000, and incur incremental cash expenses of $200,000 annually. What is the payback period and accounting rate of return (ARR)?
The following four suggestions have been made to improve the company’s cash position. Evaluate the effect on cash flow for each of the four suggestions. After evaluating each suggestion, enter the projected cash balances in the spaces provided. Consider each suggestion separately. Reset cells to their initial values after each new suggestion. Seek agreement with suppliers to extend the credit period to 30 days. This would mean that all current monthly purchases would be paid for in the following month. Raise the unit price from $28 to $30. A price increase will reduce unit sales by 10% each month. Unit purchases will also be reduced by 10%. Put the company’s two salespeople on straight commission. This would reduce fixed marketing and administrative costs to $1,500 per month and raise variable marketing and administrative costs to $7 per unit. Increase the cash discount from 5% to 10%. It is anticipated that this would increase the percentage of customers paying within the discount period to 85%, and those paying the month after the discount period would drop to 8%. Five percent would pay in the following month and 2% would still be uncollectible. What are your recommendations for Sweet Pleasures, Inc.? Consider potential impact on profits as well as cash balances.
Upton Computers makes bulk purchases of small computers, stocks them in conveniently located warehouses, ships them to its chain of retail stores, and has a staff to advise customers and help them set up their new computers. Uptons balance sheet as of December 31, 2019, is shown here (millions of dollars): Sales for 2019 were 350 million, and net income for the year was 10.5 million, so the firms profit margin was 3.0%. Upton paid dividends of 4.2 million to common stockholders, so its payout ratio was 40%. Its tax rate was 25%, and it operated at full capacity. Assume that all assets/sales ratios, (spontaneous liabilities)/sales ratios, the profit margin, and the payout ratio remain constant in 2020. a. If sales are projected to increase by 70 million, or 20%, during 2020, use the AFN equation to determine Uptons projected external capital requirements. b. Using the AFN equation, determine Uptons self-supporting growth rate. That is, what is the maximum growth rate the firm can achieve without having to employ nonspontaneous external funds? c. Use the forecasted financial statement method to forecast Uptons balance sheet for December 31, 2020. Assume that all additional external capital is raised as a line of credit at the end of the year. (Because the debt is added at the end of the year, there will be no additional interest expense due to the new debt.) Assume Uptons profit margin and dividend payout ratio will be the same in 2020 as they were in 2019. What is the amount of the line of credit reported on the 2020 forecasted balance sheets? (Hint: You dont need to forecast the income statements because the line of credit is taken out on the last day of the year and you are given the projected sales, profit margin, and dividend payout ratio; these figures allow you to calculate the 2020 addition to retained earnings for the balance sheet without actually constructing a full income statement.)
Your company is planning to purchase a new log splitter for is lawn and garden business. The new splitter has an initial investment of $180,000. It is expected to generate $25,000 of annual cash flows, provide incremental cash revenues of $150,000, and incur incremental cash expenses of $100,000 annually. What is the payback period and accounting rate of return (ARR)?
Assume a company is going to make an investment of $450,000 in a machine and the following are the cash flows that two different products would bring in years one through four. Which of the two options would you choose based on the payback method?
Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the following cash flows over the next five years: $99,000, $88,000, $92,000. $87,000, and $72,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel. see Appendix C.
Consolidated Aluminum is considering the purchase of a new machine that will cost $308,000 and provide the following cash flows over the next five years: $88,000, 92,000, $91,000, $72,000, and $71,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel, see Appendix C.
As an operations management consultant for the Graco Manufacturing Company, you have been asked to evaluate a furniture manufacturer’s cash-to-cash conversion cycle un- der the following assumptions for its performance in 2021: sales of $5 million, cost of goods sold of $20.8 million, 50 operating weeks a year, total average on-hand inventory of $2,150,000, accounts receivable equal to $2,455,000, and accounts payable of $3,695,000. However, the average on-hand inventory does not include $4,200,000 in inventory al- allowance for excess, cancelled orders, and obsolete inventories. Based on this description and data, please answer the following questions: What is the “total” cash-to-cash conversion cycle for Graco Manufacturing Company for the 2021 year ignoring the $4,200,000 in inventory allowances for excess, cancelled orders, and obsolete inventories? Please show all the calculations necessary to justify your answer. What would be impact of including the $4,200,00 in inventory…
Your boss asks you to compute your company's cash conversion cycle. Looking at the financial statements, you see that the average inventory for the year was $24,800, accounts receivable averaged $18,700, and accounts payable averaged $16,100. You also see that the company had sales of $138,000 and that cost of goods sold was $110,400. Calculate firm's cash conversion cycle. (Use 365 days for calculation. Round intermediate calculations and final answer to 1 decimal place, e.g. 15.1.)
Shulman Inc. has the following data, in thousands. Assuming a 365-day year, what is the firm's cash conversion cycle? (Show your work) Annual sales = $45,000 Annual cost of goods sold = $30,000 Inventory = $4,500 Accounts receivable = $1,800 Accounts payable = $2,500
k k As a newly appointed Chief Supply Chain Officer at YS Medical Devices, you want to figure out the company's cash-to-cash conversion cycle and make decision(s) to improve the company's performance. Here are pieces of financial data you may utilize: Sales: $23.5 million Cost of goods sold: $20.8 million Operating weeks a year: 50 Total average on-hand inventory (average inventory value): $2,150,000 Accounts receivable: $2,455,000 Accounts payable: $3,695,000
Cullumber Specialties just purchased inventory-management computer software at a cost of $1,440,950. Cost savings from the investment over the next six years will produce the following cash flow stream: $128,340, $258,240, $432,600, $435,250, $794,320, and $649,740. What is the payback period on this investment? - Payback period is years?