Question

In: Accounting

Ridgill industries currently has $51,500 in cash, $60,000 in accounts receivable, $63,750 in inventories, $21,500 in...

Ridgill industries currently has $51,500 in cash, $60,000 in accounts receivable, $63,750 in inventories, $21,500 in accrued liabilities, and $90,000 in accounts payable on its balance sheet. The firm’s production manager has determined that cost of goods sold accounts for 75% of the sales revenue produced where Ridgill’s sales are $456,250.

Ridgill’s CFO is interested in determining the length of time funds are tied up in working capital. Use the information given above to answer the following questions. (Note, Use 365 days as the length of a year in all calculations, and round all values to two decimal places.)


1. What is Ridgill’s inventory conversion period? *


20 days

48 days

68 days

96 days

None of the above

2. What is Ridgill’s average collection period? *


20 days

48 days

68 days

96 days

None of the above

3. What is Ridgill’s payable deferral period? *


20 days

48 days

68 days

96 days

None of the above

4. What is the length of the firm’s cash conversion cycle? *


20 days

48 days

68 days

96 days

None of the above

5. Assume Ridgill’s 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 $59,000 with no effect on sales and payables. By how much must the firm also reduce its accounts receivable to meet its goal in the reduction of the cash conversion cycle? *


$6,162.5

$53,837.5

$60,000

$59,000

None of the above

Solutions

Expert Solution

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

You have $60,000 in cash, $40,000 in accounts receivable, $100,000 in inventory, $65,000 in accounts payable,...
You have $60,000 in cash, $40,000 in accounts receivable, $100,000 in inventory, $65,000 in accounts payable, $25,000 in accrued expenses on 12/31/2017. What was your net working capital balance on this date?
(Cash conversion cycle​) Historical data for the​ firm's sales, accounts​ receivable, inventories, and accounts payable for...
(Cash conversion cycle​) Historical data for the​ firm's sales, accounts​ receivable, inventories, and accounts payable for the Crimson Mfg. Company​ follow: a. Calculate​ Crimson's days of sales​ outstanding, days of payables​ outstanding, and days of sales in inventory for each of the 5 years. ​(Assume a​ 365-day year. Hint​: Assume that the​ firm's cost of goods sold equals​ 70% of​ sales.) What has Crimson accomplished in its atempts to better manage its investments in account receivable and​ inventory? b. Calculate​...
Cash conversion cycle​) Historical data for the​ firm's sales, accounts​ receivable, inventories, and accounts payable for...
Cash conversion cycle​) Historical data for the​ firm's sales, accounts​ receivable, inventories, and accounts payable for the Crimson Mfg. Company​ follow: LOADING.... a. Calculate​ Crimson's days of sales​ outstanding, days of payables​ outstanding, and days of sales in inventory for each of the 5 years. ​(Assume a​ 365-day year. Hint​: Assume that the​ firm's cost of goods sold equals​ 70% of​ sales.) What has Crimson accomplished in its atempts to better manage its investments in account receivable and​ inventory? b....
Squash Delight Inc. has the following balance sheet: Assets Cash $ 60,000 ' Accounts receivable 287,000...
Squash Delight Inc. has the following balance sheet: Assets Cash $ 60,000 ' Accounts receivable 287,000 Fixed assets 775,000 Total assets $ 1,122,000 Liabilities Accounts payable $ 275,000 Notes payable 53,000 Common stock (120,000 shares @ $2 par) 240,000 Capital in excess of par 100,000 Retained earnings 454,000 Total liabilities & owners' equity $ 1,122,000 The firm’s stock sells for $10 a share. a. Show the effect on the capital accounts of a two-for-one stock split. (Do not round intermediate...
Exercise 91 The following information pertains to Wamser Company: Cash $21,500 Accounts receivable 125,000 Inventory 75,500...
Exercise 91 The following information pertains to Wamser Company: Cash $21,500 Accounts receivable 125,000 Inventory 75,500 Plant assets (net) 382,000 Total assets $604,000 Accounts payable $75,000 Accrued taxes and expenses payable 25,000 Long-term debt 49,500 Common stock ($10 par) 160,000 Paid-in capital in excess of par 88,500 Retained earnings 206,000 Total equities $604,000 Net sales (all on credit) $804,000 Cost of goods sold 600,500 Net income 81,500 Compute the following: (Round answers to 2 decimal places e.g. 15.25.) (a) Current...
FERRIS COMPANY HAS CASH OF $70,000, SHORT-TERM INVESTMENTS OF 60,000, NET ACCOUNTS RECEIVABLE OF $86,000, INVENTORY...
FERRIS COMPANY HAS CASH OF $70,000, SHORT-TERM INVESTMENTS OF 60,000, NET ACCOUNTS RECEIVABLE OF $86,000, INVENTORY OF $96,000, PREPAID EXPENSES OF $60,000, ACCOUNTS PAYABLE OF $50,000, UNEARNED REVENUE OF $20,000, NOTES PAYABLE OF $10,000, SALARY PAYABLE OF $6,000, MORTGAGE PAYABLE OF $100,000, BONDS PAYABLE OF $75,000, INCOME TAXES PAYABLE OF $4,000, GROSS SALES OF $520,000, SALES RETURNS OF $8,000 AND SALES DISCOUNTS OF $7,000. LAST YEAR’S NET ACCOUNTS RECEIVABLE WERE $114,000. COMPUTE THE FOLLOWING RATIOS: A. QUICK RATIO B. AVERAGE...
Harrelson Inc. currently has $750,000 in accounts receivable
Harrelson Inc. currently has $750,000 in accounts receivable, and its days sales outstanding (DSO) is 55 days. It wants to reduce its DSO to 35 days by pressuring more of its customers to pay their bills on time. If this policy is adopted the company's average sales will fall by 15 percent. What will be the level of accounts receivable following the change? Assume a 365 day year.
Cash $   Current liabilities $   Accounts receivable $   Long-term debt $40,000 Inventories $   Common stock $  ...
Cash $   Current liabilities $   Accounts receivable $   Long-term debt $40,000 Inventories $   Common stock $   Fixed assets $   Retained earnings $60,000 Total assets $200,000 Total liabilities and equity $   Sales $   Cost of goods sold 1. Complete the balance sheet and sales information using the following financial data: Total assets turnover: 1.1x Days sales outstanding: 38 days Inventory turnover ratio: 4x Fixed assets turnover: 2.5x Current ratio: 2.5x Gross profit margin on sales: (Sales - Cost of goods sold)/Sales...
1.The balance sheet for PalletPaper, Inc. shows cash is $73,500, accounts receivable are $185,400, inventories are...
1.The balance sheet for PalletPaper, Inc. shows cash is $73,500, accounts receivable are $185,400, inventories are $447,300, fixed assets are $820,000, current liabilities are $489,450, accounts payable are $132,500, accrued payroll is $145,000 and long-term debt is $900,000? What is the current ratio for PalletPaper? A.more than 1.5 B.more than 1.46but less than 1.53 C.more than 1.39but less than1.4 D.more than 1.32 but less than 1.39 E.less than 1.32 2.Which of the following statements is correct?(x)If a firm undertakes a...
Mountain High transferred $60,000 of accounts receivable to the Prudential Bank.
Mountain High Ice Cream Company reports under IFRS. Mountain High transferred $60,000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10% to cover sales returns and allowances. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,000). Mountain High anticipates a $3,000 recourse obligation. The bank charges a 2%...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT