Question

Cyree Inc. has annual sales of $80,000,000; its average inventory is $20,000,000; and its average accounts receivable is $16,000,000. The firm buys all raw material on terms of net 35 days payable deferral with $150,000 cost of the good sold per day. The firm is searching for ways to shorten the cash conversion cycle. If inventory conversion can be lowered to 70 days and average collection period can be reduced to 60 days while payable deferral is lowered by 3 days, cost of the good sold, and annual sales remain constant, how much is the increase in firm's free cash flow?

Answer #1

this question is related to cash conversion cycle.

Siren Inc. has annual sales of $85,000,000, COGS of $75,000,000,
its average inventory is $20,000,000, and its average accounts
receivable is $16,000,000. The firm buys all raw materials on terms
of net 33 days, and it pays on time. The firm is searching for ways
to shorten the cash conversion cycle. If sales can be maintained at
existing levels while lowering inventory by $4,000,000 and accounts
receivable by $2,000,000, by how many days would the cash
conversion cycle be changed?...

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...

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...

Nexus Enterprises has an inventory conversion period
of 50 days, an average collection period of 35 days and a payables
deferral period of 25 days. assume that cost of goods sold is 80%
of sales.
1 what is the length of the firms cash conversion
cycle?
2 if annual sales are 4380000 dollars and all sales
are on credit what is the firm's investment in accounts
receivable?
3 how many times per year does negus Enterprises turn
over its inventory?

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...

A firm generates annual sales of $27M, with variable costs equal
to 70% of sales. The firm has an average collection period of 35
days, which it can shorten to 30 days by offering a cash discount
of 1% for early payment. It costs the firm 16% per year to finance
its capital investment in the cash conversion cycle. Should the
firm offer the discount if it expects that every year 60% of
customers will take advantage of it and...

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...

Zane Corporation has an inventory conversion period of 86 days,
an average collection period of 33 days, and a payables deferral
period of 38 days. Assume 365 days in year for your
calculations.
Length of the cash conversion cycle = 81 days
Zane's annual sales are $3,457,635 and all sales are on
credit.
The investment in accounts receivable is $312,608.09
How many times per year does Zane turn over its
inventory? Assume that the cost of goods sold is 75%...

Desai Inc. has the following data, in thousands.
Assume the firm uses a 365-day year.
Annual sales $45,000
Annual cost of goods sold $30,000
Inventory $4,500
Accounts receivable $1,800
Accounts payable $2,500
1. What is the firm’s inventory conversion period?
*
38.93 days
54.75 days
14.60 days
30.42 days
None of the above
2. What is the firm’s average collection period?
*
38.93 days
54.75 days
14.60 days
30.42 days
None of the above
3. What is the firm’s payable...

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' annual sales are $3,705,000 and all sales are on
credit, what is the firm's investment in accounts receivable? Round
your answer to the nearest...

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