Question

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 to $647,260 with no effect on sales. By how much must the
finn also reduce its accounts

receivable to meet its goal in the reduction of the cash conversion
cycle?

Answer #1

Ingram Inc. carries an average inventory of $1,125,000. Its
annual sales are $15 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. Its new CFO wants to decrease the cash
conversion cycle by 10 days, based on a 365-day year. He believes
he can reduce the average inventory to $970,890...

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...

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...

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...

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...

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 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...

Problem 16-11
Cash Conversion Cycle
Negus Enterprises has an inventory conversion period of 80 days,
an average collection period of 47 days, and a payables deferral
period of 33 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 $3,693,025 and all sales are on
credit, what is the firm's investment in accounts receivable? Round...

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