Question

In: Finance

Zane Corporation has an inventory conversion period of 63 days, an average collection period of 33...

Zane Corporation has an inventory conversion period of 63 days, an average collection period of 33 days, and a payables deferral period of 37 days. Assume 365 days in year for your calculations.

What is the length of the cash conversion cycle? Round your answer to two decimal places.

__days

If Zane's annual sales are $2,679,070 and all sales are on credit, what is the investment in accounts receivable? Round your answer to the nearest cent. Do not round intermediate calculations. $

How many times per year does Zane turn over its inventory? Assume that the cost of goods sold is 75% of sales. Use sales in the numerator to calculate the turnover ratio. Round your answer to two decimal places. Do not round intermediate calculations.

Expert Solution

a.

Cash conversion cycle

Cash conversion cycle is calculated by using following formula:

Cash conversion cycle = Inventory turnover day + Receivables day – Payables day

= 63 days + 33 days – 37 days

= 59 days

Hence, Cash conversion cycle is 59 days.

b.

Total sales = $2,679,070

Average collection period = 33 days

Investment in account receivables = ($2,679,070 / 365) × 33

= $7,339.92 × 33

= $242,217.29

Investment in account receivables is $242,217.29.

Inventory Turnover ratio = 365 / 63

= 5.79 times

5.79 times Zane turn over its inventory.

COst of goods sold = $2,679,070 × 75%

= $2,009,302.50.

Cost of goods sold is $2,009,302.50.

Value of inventory = Cost of goods sold / Inventory turnover

= $2,009,302.50 / 5.79

= $346,811.12.

Value of inventory is $346,811.12.

jeff jeffy answered 5 months ago

Zane Corporation has an inventory conversion period of 89 days, an average collection period of 39...

Zane Corporation has an inventory conversion period of 89 days, an average collection period of 39 days, and a payables deferral period of 31 days. Assume 365 days in year for your calculations. What is the length of the cash conversion cycle? Round your answer to two decimal places. days If Zane's annual sales are $3,706,915 and all sales are on credit, what is the investment in accounts receivable? Do not round intermediate calculations. Round your answer to the nearest...

CASH CONVERSION CYCLE Zane Corporation has an inventory conversion period of 52 days, an average collection...

CASH CONVERSION CYCLE Zane Corporation has an inventory conversion period of 52 days, an average collection period of 37 days, and a payables deferral period of 25 days. Assume 365 days in year for your calculations. What is the length of the cash conversion cycle? Round your answer to two decimal places. days If Zane's annual sales are $3,427,440 and all sales are on credit, what is the investment in accounts receivable? Do not round intermediate calculations. Round your answer...

Company Inventory Conversion Period, days Average Collection Period, days Payables Deferral Period, days Cash Conversion Cycle,...

Company Inventory Conversion Period, days Average Collection Period, days Payables Deferral Period, days Cash Conversion Cycle, days Adidas 112 27 57 82 Puma 107 18 49 Nike 128 20 43 105 Under Armor 89 24 21 1)calculate CCC for Puma and UA. 2)pick any 1 company of the 4: how its operational liquidity stands versus competitors (other 3 firms)? how can this company improve its liquidity? What are possible risks/limitations to your proposed changes?

A firm has days' sales in an inventory of 105 days, an average collection period of...

A firm has days' sales in an inventory of 105 days, an average collection period of 35 days, and takes 42 days, on average, to pay its accounts payable. Taken together, what do these three figures imply about the firm's operations and its cash flows?

United States Steel Corporation has a receivables collection period of thirty three days, a days inventory...

United States Steel Corporation has a receivables collection period of thirty three days, a days inventory of sixty-eight days, and a payables period of forty-nine days. How long is its funding gap? a. -14 days b. 52 days c. 84 days d. 150 days

Define the following terms and list the equation for each. Inventory conversion period – Average collection...

Define the following terms and list the equation for each. Inventory conversion period – Average collection period – Payables deferral period – Cash conversion cycle – What should a firm’s goal be regarding the cash conversion cycle, holding other things constant? Explain your answer.

If a company has a cash-conversion cycle of 15 days, an average age of inventory of...

If a company has a cash-conversion cycle of 15 days, an average age of inventory of 40 days and an average payment period of 60 days, calculate the average collection period.

Mervyn’s Fine Fashions has an average collection period of 40 days. The accounts receivable balance is...

Mervyn’s Fine Fashions has an average collection period of 40 days. The accounts receivable balance is $46,000. What is the value of its annual credit sales? (Use a 360-day year.)

Poutine Cheez Company has yearly sales of $550,000 and an average collection period of 35 days....

Poutine Cheez Company has yearly sales of $550,000 and an average collection period of 35 days. A factoring company is offering a 35-day receivables loan equal to 85% of the accounts receivable at 9% along with a commission fee of .45% of the receivables. The firm estimates that by taking the offer, it could save $300 in collection costs and a full half of one percent in bad debt costs, as a percentage of sales. What is the annual cost...

the conversion cycle period is 24 days and the operating period is 23 days for Company...

the conversion cycle period is 24 days and the operating period is 23 days for Company tiger another company (m) has 57 days for operating period and 69 days for conversion cash period what are the differences and similarities and compare it