In: Finance
Problem 16-12
Working Capital Cash Flow Cycle
Strickler Technology is considering changes in its working
capital...
Problem 16-12
Working Capital Cash Flow Cycle
Strickler Technology is considering changes in its working
capital policies to improve its cash flow cycle. Strickler's sales
last year were $3,140,000 (all on credit), and its net profit
margin was 8%. Its inventory turnover was 7 times during the year,
and its DSO was 36 days. Its annual cost of goods sold was
$1,750,000. The firm had fixed assets totaling $515,000.
Strickler's payables deferral period is 40 days. Assume 365 days in
year for your calculations. Do not round intermediate
calculations.
- Calculate Strickler's cash conversion cycle. Round your answer
to two decimal places.
days
- Assuming Strickler holds negligible amounts of cash and
marketable securities, calculate its total assets turnover. Round
your answer to two decimal places.
x
Calculate its ROA. Round your answer to two decimal places.
%
- Suppose Strickler's managers believe the annual inventory
turnover can be raised to 10 times without affecting sale or profit
margins. What would Strickler's cash conversion cycle have been if
the inventory turnover had been 10 for the year? Round your answer
to two decimal places.
days
What would Strickler's total assets turnover have been if the
inventory turnover had been 10 for the year? Round your answer to
two decimal places.
x
What would Strickler's ROA have been if the inventory turnover had
been 10 for the year? Round your answer to two decimal
places.
%