NECTAR is a small company whose last year sales were €700,000, and profit margin of 7%....

NECTAR is a small company whose last year sales were €700,000, and profit margin of 7%. It is estimated that the company turned over its inventory 5 times during the year and its accounts receivable averaged €250,000. Fixed assets of this company amount to €180,000 and its payables deferral period is 40 days. Perform the calculations based on a 365-day year. Required: a) Calculate Inventory conversion period of this company, Receivables collection period and its Cash conversion cycle. b) Ignoring amounts of cash and marketable securities that the company holds, calculate its Total assets turnover and Return on assets. c) Assuming NECTAR’s managers believe that annual inventory turnover ratio can be raised to 6 times without affecting sales. Calculate the following, if the inventory turnover ratio had been 6 times for the year: - Cash conversion cycle - Total assets turnover - Return on assets d) The firm sells on terms of 2/10, net 30, meaning that it gives its customers

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