Question

DJ Inc.'s CFO would like to decrease its cash conversion cycle by 10 days (based on...

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?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Ingram Inc. carries an average inventory of $1,125,000. Its annual sales are $15 million, its cost...
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...
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...
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...
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...
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...
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...
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...
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...
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...
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...