Question
In: Finance
Your firm currently has an operating cycle of 90 days. You are analyzing some operational changes...
Your firm currently has an operating cycle of 90 days. You are analyzing some operational changes which are expected to decrease the accounts receivable period by 4 days and decrease the inventory period by 5 days. The accounts payable turnover rate is expected to increase from 8 to 9 times per year. If all of these changes are adopted, what will be your firm's new cash cycle?
a) 46 days
b) 41 days
c) 51 days
d) 72 days
e) 36 days
Solutions
Expert Solution
Answer : Correct Option is d) 72 days
Calculation
Cash Conversion Cycle = Operating Cycle +/- Ajustment in Account Receivable period and inventory Turnover period - Accounts payable period
= 90 - 4-5-9
= 72 days.
jeff jeffy answered 2 years agoRelated Solutions
Chasteen Hall currently has 61 days in its cash cycle and 143 days in its operating...
Chasteen Hall currently has 61 days in its cash cycle and 143
days in its operating cycle. The firm purchases its inventory from
one supplier. This supplier has offered a 5 percent discount to the
firm if it will pay for its purchases within 15 days instead of the
normal 38 days. If the firm opts to take advantage of the discount
offered, its new operating cycle will be _____ days and its new
cash cycle will be _____ days.
Analyzing Operational Changes Operating results for department B of Delta Company during 2016 are as follows:...
Analyzing Operational Changes
Operating results for department B of Delta Company during 2016 are
as follows:
Sales
$550,000
Cost of goods sold
378,000
Gross profit
172,000
Direct expenses
120,000
Common expenses
66,000
Total expenses
186,000
Net loss
$(14,000)
If department B could maintain the same physical volume of
product sold while raising selling prices an average of 15% and
making an additional advertising expenditure of $60,000, what would
be the effect on the department's net income or net loss? (Ignore...
Calvani, Inc., has a cash cycle of 44.5 days, an operating cycle of 65 days, and...
Calvani, Inc., has a cash cycle of 44.5 days, an operating cycle
of 65 days, and an inventory period of 28 days. The company
reported cost of goods sold in the amount of $344,000, and credit
sales were $567,000.
What is the company’s average balance in accounts payable and
accounts receivable?
Average accounts payable $ _______
Average accounts receivable $______
Betty's Bagels has a cash cycle of 15 days, an operating cycle of 32 days, and...
Betty's Bagels has a cash cycle of 15 days, an operating cycle
of 32 days, and an inventory period of 1.5 days. The company
reported cost of goods sold in the amount of $102,000, and credit
sales were $206,000. What is the company's average balance in
accounts payable? Select one: a. $18,414.36 b. $4,843.84 c.
$4,750.65 d. $21,918.00 e. $9,594.52
Business operating cycle. Kolman Kampers has a production cycle of 33 days, a collection cycle of...
Business operating cycle. Kolman Kampers has a production cycle
of 33 days, a collection cycle of 19 days, and a payment cycle of
12 days. What are Kolman's business operating cycle and cash
conversion cycle? If Kolman reduces the production cycle by 1
days, what is the effect on the cash conversion cycle? If Kolman
decreases the collection cycle by 1 days, what is the effect on
the cash conversion cycle? If Kolman increases the payment cycle
by 1 days,...
The operating cycle for: Amazon = 85 days Walmart = 60 days The cash cycle for:...
The operating cycle for:
Amazon = 85 days
Walmart = 60
days
The cash cycle for:
Amazon =95 days
Walmart =15 days
Q1/ What does the operating and cash cycle tell us about each
company? Which company is doing better with their working capital
management?
Q2/ What recommendations would you make to the other company(s)
to improve its working capital management?
What are some of the characteristics of a firm with a long operating cycle? What are...
What are some of the characteristics of a firm with a long
operating cycle? What are some of the characteristics of a firm
with a long cash cycle? Provide examples of firms that are
operating or have operated with these types of cycles and explain
why they fit the characteristics.
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
A U.S. firm has a payable of 125,000 Swiss francs in 90 days. The current spot...
A U.S. firm has a payable of 125,000 Swiss francs in 90 days.
The current spot rate is $.6698/SFr and the 90 day forward rate is
$.6776/SFr.
90 day call option on SFr:
strike=$.68, premium=$.0096
90 day put option on SFr:
strike=$.68, premium=$.0105
Interest
rates
US
Switz.
Possible spot rate in 90 days
90 day deposit
rate
3%
3%
Spot
Probability
90 day borrowing
rate
3.2%
3.2%
$.65
10%
$.67
20%
$.69
70%
______________________________________________________________________
Calculate the expected...
A U.S. firm has a payable of 125,000 Swiss francs in 90 days. The current spot...
A U.S. firm has a payable of 125,000 Swiss francs in 90 days.
The current spot rate is $.6698/SFr and the 90 day forward rate is
$.6776/SFr.
90 day call option on SFr:
strike=$.68, premium=$.0096
90 day put option on SFr:
strike=$.68, premium=$.0105
Interest
rates
US
Switz.
Possible spot rate in 90 days
90 day deposit
rate
3%
3%
Spot
Probability
90 day borrowing
rate
3.2%
3.2%
$.65
10%
$.67
20%
$.69
70%
______________________________________________________________________
Calculate the expected...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- The legal landscape is perpetually changing. Psychologists must remain abreast of these changes to avoid potentially...
- We are evaluating a project that costs $1.68 million, has a six-year life, and has no...
- In C++ Having call-by-reference allows one to use storeback parameters, i.e., parameters whose values are transmitted...
- You must evaluate a proposal to buy a new milling machine. The base price is $175,000,...
- “Triangle Guessing” game in Python The program accepts the lengths of three (3) sides of a...
- THIS PROGRAM HAS TO BE WRITTEN IN C Single function to perform the parity computation on...
- Consider a buffer system consisting of Benzoic acid (pKa = 4.20) and sodium benzoate, a) Would...
ADVERTISEMENT