Question

In: Finance

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.

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

  2. 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 to the nearest cent.
    $  

  3. 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. Do not round intermediate calculations. Round your answer to two decimal places.

Solutions

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE


Related Solutions

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...
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?
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.
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
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
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.
Florida Distributors have a high cash conversion cycle (CCC); 47 days compared to industry average of...
Florida Distributors have a high cash conversion cycle (CCC); 47 days compared to industry average of 25 days. a) What would you recommend to this company to shorten its cash conversion cycle (CCC)? b) How is reduction in CCC going to effect the profitability of this company? c) Florida Distributors tries to match the maturity of its assets and liabilities. Describe how this company could adopt a more aggressive or a more conservative financing policy.
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...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT