Question

Parramore Corp has $18 million of sales, $1 million of inventories, $3 million of receivables, and...

Parramore Corp has $18 million of sales, $1 million of inventories, $3 million of receivables, and $1 million of payables. Its cost of goods sold is 75% of sales, and it finances working capital with bank loans at an 8% rate. Assume 365 days in year for your calculations. Do not round intermediate steps.

A. What is Parramore's cash conversion cycle (CCC)? Do not round intermediate calculations. Round your answer to two decimal places. _______ DAYS

B. If Parramore could lower its inventories and receivables by 7% each and increase its payables by 7%, all without affecting sales or cost of goods sold, what would be the new CCC? Do not round intermediate calculations. Round your answer to two decimal places. ________days

C. How much cash would be freed up, if Parramore could lower its inventories and receivables by 7% each and increase its payables by 7%, all without affecting sales or cost of goods sold? Do not round intermediate calculations. Round your answer to the nearest cent. Write out your answer completely. For Example, 13.2 million should be entered as 13,200,000. $ __________

D.By how much would pretax profits change, if Parramore could lower its inventories and receivables by 7% each and increase its payables by 7%, all without affecting sales or cost of goods sold? Do not round intermediate calculations. Round your answer to the nearest cent. Write out your answer completely. For Example, 13.2 million should be entered as 13,200,000.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

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
Parramore Corp has $15 million of sales, $3 million of inventories, $4 million of receivables, and...
Parramore Corp has $15 million of sales, $3 million of inventories, $4 million of receivables, and $3 million of payables. Its cost of goods sold is 85% of sales, and it finances working capital with bank loans at an 7% rate. Assume 365 days in year for your calculations. Do not round intermediate steps. What is Parramore's cash conversion cycle (CCC)? Do not round intermediate calculations. Round your answer to two decimal places. days If Parramore could lower its inventories...
3. Winston Inc. is trying to determine the effect of its inventory turnover ratio and days...
3. Winston Inc. is trying to determine the effect of its inventory turnover ratio and days sales outstanding on its cash conversion cycle. Winston's 2015 sales (all on credit) were $127,000 and its cost of goods sold was 75% of sales. It turned over its inventory 9 times during the year. Its receivables balance at the end of the year was $13,105.05 and its payables balance at the end of the year was $7,417.15. Using this information calculate the firm's...
RECEIVABLES INVESTMENT Leyton Lumber Company has sales of $11 million per year, all on credit terms...
RECEIVABLES INVESTMENT Leyton Lumber Company has sales of $11 million per year, all on credit terms calling for payment within 30 days, and its accounts receivable are $1.98 million. Assume 365 days in year for your calculations. A. What is Leyton's DSO? Do not round intermediate calculations.Round your answer to two decimal places.   days B. What would DSO be if all customers paid on time? Do not round intermediate calculations. Round your answer to two decimal places.   days C. How...
RECEIVABLES INVESTMENT Leyton Lumber Company has sales of $12 million per year, all on credit terms...
RECEIVABLES INVESTMENT Leyton Lumber Company has sales of $12 million per year, all on credit terms calling for payment within 30 days, and its accounts receivable are $1.8 million. Assume 365 days in year for your calculations. What is Leyton's DSO? Round your answer to two decimal places.             days What would DSO be if all customers paid on time? Round your answer to two decimal places.           days How much capital would be released if Leyton could take actions...
REGRESSION AND INVENTORIES Charlie's Cycles Inc. has $130 million in sales. The company expects that its...
REGRESSION AND INVENTORIES Charlie's Cycles Inc. has $130 million in sales. The company expects that its sales will increase 7% this year. Charlie's CFO uses a simple linear regression to forecast the company's inventory level for a given level of projected sales. On the basis of recent history, the estimated relationship between inventories and sales (in millions of dollars) is as follows: Inventories = $12 + 0.0970(Sales) Given the estimated sales forecast and the estimated relationship between inventories and sales,...
Leyton Lumber Company has sales of $12 million per year, all on credit terms calling for...
Leyton Lumber Company has sales of $12 million per year, all on credit terms calling for payment within 30 days, and its accounts receivable are $1.8 million. Assume 365 days in year for your calculations. What is Leyton's DSO? Round your answer to two decimal places. days What would DSO be if all customers paid on time? Round your answer to two decimal places. days How much capital would be released if Leyton could take actions that led to on-time...
Leyton Lumber Company has sales of $9 million per year, all on credit terms calling for...
Leyton Lumber Company has sales of $9 million per year, all on credit terms calling for payment within 30 days, and its accounts receivable are $2.25 million. Assume 365 days in year for your calculations. What is Leyton's DSO? Round your answer to two decimal places.   days What would DSO be if all customers paid on time? Round your answer to two decimal places.   days How much capital would be released if Leyton could take actions that led to on-time...
Earleton Manufacturing Company has $3 billion in sales and $900,000,000 in fixed assets. Currently, the company's...
Earleton Manufacturing Company has $3 billion in sales and $900,000,000 in fixed assets. Currently, the company's fixed assets are operating at 85% of capacity. What level of sales could Earleton have obtained if it had been operating at full capacity? Write out your answers completely. For example, 13 million should be entered as 13,000,000. Round your answer to the nearest dollar. What is Earleton's target fixed assets/sales ratio? Do not round intermediate calculations. Round your answer to two decimal places....
Winston Inc. is trying to determine the effect of its inventory turnover ratio and days sales...
Winston Inc. is trying to determine the effect of its inventory turnover ratio and days sales outstanding on its cash conversion cycle. Winston's 2015 sales (all on credit) were $190,000 and its cost of goods sold was 75% of sales. It turned over its inventory 8.06 times during the year. Its receivables balance at the end of the year was $13,145.01 and its payables balance at the end of the year was $7,416.42. Using this information calculate the firm's cash...
A firm is considering several policy changes to increase sales. It will increase the variety of...
A firm is considering several policy changes to increase sales. It will increase the variety of goods it keeps in inventory, but this will increase inventory by $12,000. It will offer more liberal sales terms, but this will result in average receivables increasing by $69,000. These actions are expected to increase sales by $820,000 per year, and cost of goods will remain at 80% of sales. Because of the firm’s increased purchases for its own production needs, average payables will...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT