Question

Which of the following methods can be used to improve the firm’s cash conversion cycle? Increase...

Which of the following methods can be used to improve the firm’s cash conversion cycle?

Increase the firm’s inventory conversion cycle.

Decrease the firm’s receivables collection period.

Decrease the firm’s payables deferral period.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Option (b) is correct

When we decrease the firm's receivables collection period, then its cash conversion cycle will improve. Shorter the cash coversion cycle, better it is for the firm. Cash conversion cycle is given by:

Cash conversion cycle = Inventory conversion cycle + Receivables collection period - Payables deferral period

From the above equation, it can be seen that if receivables collection period is decreased, then cash conversion cycle will improve.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
43. You have recently been hired to analyze a firm’s cash conversion cycle. Using the following...
43. You have recently been hired to analyze a firm’s cash conversion cycle. Using the following information and a 365-day year: Current inventory = $120,000; Annual sales = $600,000; Accounts receivable = $157,808; Accounts payable = $25,000; Total annual purchases = $365,000. Calculate the firm’s cash conversion cycle (CCC). 25 days 73 days 96 days 144 days 44. Based on the results in Question 43, which of the following methods can be used to improve the firm’s cash conversion cycle?...
1) define Conversion Cycle, 2) solve the question below. Include how you solved the problem in...
1) define Conversion Cycle, 2) solve the question below. Include how you solved the problem in words, and then your detailed formula. The University has the following data. What is the University’s cash conversion cycle? Inventory conversion period = 50 days Receivables collection period = 17 days Payables deferral period = 25 days
A business analysis has recently been hired to improve the performance of a firm. As one...
A business analysis has recently been hired to improve the performance of a firm. As one part of your analysis, the analyst wants to determine the firm’s cash conversion cycle. Using the following information and a 365-day year: Current inventory = $2,000,000; Annual sales = $10,000,000; Accounts receivable = $657,534; Accounts payable = $657,534; Cost of goods sold = $8,000,000. Calculate the firm’s inventory conversion cycle. 27 days 73 days 65 days 95 days Based on information from Question 46,...
1. You have the following information: Accounts receivable                       $160,000 Total credit sales $2,500,000 Assume a 360...
1. You have the following information: Accounts receivable                       $160,000 Total credit sales $2,500,000 Assume a 360 day year and compute the receivables collection period. 2.Inventory conversion period 15 days Closing inventory $28,000 Compute C O G S (assuming a 360 day year). 3.Inventory conversion period                      68.2 days Receivables collection period 35.8 days Payables deferral period 24.6 days Compute the cash conversion cycle: 4.Inventory conversion period 55.8 days Days sales outstanding 23.9 days Days payables outstanding 32.5 days The cash conversion...
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...
An increase in which one of the following will decrease the cash cycle, all else equal?...
An increase in which one of the following will decrease the cash cycle, all else equal? A. Payables turnover B. Days sales in inventory C. Operating cycle D. Inventory turnover rate E. Accounts receivable period
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...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT