Question

Increased Efficiency, Inc. is looking for ways to shorten its cash conversion cycle. It has annual sales of $36,500,000, or $100,000 a day on a 365-day basis. The firm's cost of goods sold is 70% of sales. On average, the company has $9,000,000 in inventory and $8,000,000 in accounts receivable. Its CFO has proposed new policies that would result in a 20% reduction in both average inventories and accounts receivable. She also anticipates that these policies would reduce sales by 10%, while the payables deferral period would remain unchanged at 40 days. What effect would these policies have on the company's cash conversion cycle? Enter your answer rounded to two decimal places. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

Answer #1

Increased Efficiency, Inc. is looking for ways to shorten its
cash conversion cycle. It has annual sales of $36,500,000, or
$100,000 a day on a 365-day basis. The firm's cost of goods sold is
75% of sales. On average, the company has $9,000,000 in inventory
and $8,000,000 in accounts receivable. Its CFO has proposed new
policies that would result in a 20% reduction in both average
inventories and accounts receivable. She also anticipates that
these policies would reduce sales by...

Increased Efficiency, Inc. is looking for ways to shorten its
cash conversion cycle. It has annual sales of $36,500,000, or
$100,000 a day on a 365-day basis. The firm's cost of goods sold is
80% of sales. On average, the company has $9,000,000 in inventory
and $8,000,000 in accounts receivable. Its CFO has proposed new
policies that would result in a 20% reduction in both average
inventories and accounts receivable. She also anticipates that
these policies would reduce sales by...

Increased Efficiency, Inc. is looking for ways to shorten its
cash conversion cycle. It has annual sales of $36,500,000, or
$100,000 a day on a 365-day basis. The firm's cost of goods sold is
65% of sales. On average, the company has $9,000,000 in inventory
and $8,000,000 in accounts receivable. Its CFO has proposed new
policies that would result in a 20% reduction in both average
inventories and accounts receivable. She also anticipates that
these policies would reduce sales by...

Whitson Co. is looking for ways to shorten its cash conversion
cycle. It has annual sales of $45,625,000, or $125,000 a day on a
365-day basis. The firm's cost of goods sold is 60% of sales. On
average, the company has $7,500,000 in inventory, $5,750,000 in
accounts receivable, and $2,750,000 in accounts payable. Its CFO
has proposed new policies that would result in a 25% reduction in
both average inventories and accounts receivable, and a 10%
increase in average accounts...

Edison Inc. has annual sales of $49,000,000 on a 365-day basis.
The firm's cost of goods sold are 75% of sales. On average, the
company has $9,000,000 in inventory and $8,000,000 in accounts
receivable. The firm is looking for ways to shorten its cash
conversion cycle. Its CFO has proposed new policies that would
result in a 20% reduction in both average inventories and accounts
receivable. She also anticipates that these policies would reduce
sales by 10%, while the payables...

Cash Conversion Cycle
Negus Enterprises has an inventory conversion period of 60 days,
an average collection period of 48 days, and a payables deferral
period of 27 days. Assume that cost of goods sold is 80% of sales.
Assume a 365-day year. Do not round intermediate calculations.
What is the length of the firm's cash conversion cycle? Round
your answer to the nearest whole number.
___days
If annual sales are $4,124,500 and all sales are on credit, what
is the...

Problem 16-11
Cash Conversion Cycle
Negus Enterprises has an inventory conversion period of 62 days,
an average collection period of 35 days, and a payables deferral
period of 36 days. Assume that cost of goods sold is 80% of sales.
Assume 365 days in year for your calculations.
What is the length of the firm's cash conversion cycle?
days
If Negus's annual sales are $3,705,000 and all sales are on
credit, what is the firm's investment in accounts receivable? Round...

Problem 21-11 Cash Conversion Cycle Negus Enterprises has an
inventory conversion period of 59 days, an average collection
period of 47 days, and a payables deferral period of 31 days.
Assume that cost of goods sold is 80% of sales. Assume 365 days in
year for your calculations. What is the length of the firm's cash
conversion cycle? days If Negus's annual sales are $3,651,525 and
all sales are on credit, what is the firm's investment in accounts
receivable? Round...

DJ Inc.'s CFO would like to decrease its cash conversion cycle
by 10 days (based on a 365 day year).
The company carries average inventory of $750,000. Its annual sales
are $10 million, its cost of goods sold
is 75% of annual sales, and its average collection period is twice
as long as its inventory conversion period.
The firm buys on terms of net 30 days, and it pays on time. The CFO
believes he can reduce the average
inventory...

Problem 16-11
Cash Conversion Cycle
Negus Enterprises has an inventory conversion period of 72 days,
an average collection period of 50 days, and a payables deferral
period of 29 days. Assume that cost of goods sold is 80% of sales.
Assume 365 days in year for your calculations.
What is the length of the firm's cash conversion cycle?
days
If Negus's annual sales are $3,757,625 and all sales are on
credit, what is the firm's investment in accounts receivable? Round...

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