J&L Packaging, Inc.: Cash-to-Cash Conversion Cycle Case Study

Jake and Lilly Gifford founded J&L Packaging, Inc. (J&LP) in 1995 after graduating from the University of Cincinnati. Jake earned a degree in robotics and mechanical engineering, while Lilly graduated with a degree in computer science. They met at the university while working on an information systems course project and married immediately after graduation. Their privately held firm manufactured cardboard packaging and boxes for computer devices such as personal computers, keyboards, replacement hard drives, servers, and so on. Many of their packages were high-end boxes with glossy finishes and the company’s logo on the box. Last year, J&L Packaging, Inc. sales were $106 million.

J&LP Packaging provided many services with their products, such as box and packaging design engineering and consulting, embossing and foil guidance, barcode advice, cartons that fold and collapse for easy storage, and a variety of colors and box strengths. In 2010, J&LP began to research the sustainability issues regarding boxes in the reverse logistics supply chain.Their research lead to a change in production technologies to accommodate up to 100 percent recycled fiber content and solar panels on the roofs of their two U.S. factories. They also hired an engineer to lead the company’s efforts to become a “Green Cycle”-certified manufacturer.

J&LP recently purchased and installed an ISOWA FALCON state-of-the-art, four-color, high-speed flexo box machine with an extensive zero defects quality control system. This box cutting and fabrication machine is manufactured in Kasugai, Japan, by the ISOWA Corporation (www.isowa.com). There are several videos of this automated machine in operation on YouTube,” for example https://www.youtube.com/watch?v5XofTns666Aw.

J&LP’s financial information for last year follows. It is assumed the business operates 300 days per year. One note in J&LP financial statement states that the $4,906,000 of inventory does not include $886,000 in inventory allowances for excess, cancelled orders, and obsolete inventories. The note goes on to say, “Inventory management remains an area of focus as we balance the need to maintain strategic inventory levels to ensure competitive lead times versus the risk of inventory obsolescence because of changing technology and customer requirements. The box and packaging business is a dynamic industry that must quickly accommodate customer requirements, changes in forecasts, and new findings from research and development on product features and options.” The following data (in thousands of dollars $) is provided.

1. Should we consider services in the cash-to-cash conversion cycle computations?
2. How will you handle the $886,000 in obsolete inventory?
3. What is the total cash-to-cash conversion cycle for J&L Packaging, Inc. for last year?
4. What are your conclusions and final recommendations?

J&L Packaging, Inc.: Cash-to-Cash Conversion Cycle Case Study

Jake and Lilly Gifford founded J&L Packaging, Inc. (J&LP) in 1995 after graduating from the University of Cincinnati. Jake earned a degree in robotics and mechanical engineering, while Lilly graduated with a degree in computer science. They met at the university while working on an information systems course project and married immediately after graduation. Their privately held firm manufactured cardboard packaging and boxes for computer devices such as personal computers, keyboards, replacement hard drives, servers, and so on. Many of their packages were high-end boxes with glossy finishes and the company’s logo on the box. Last year, J&L Packaging, Inc. sales were $106 million.

J&LP Packaging provided many services with their products, such as box and packaging design engineering and consulting, embossing and foil guidance, barcode advice, cartons that fold and collapse for easy storage, and a variety of colors and box strengths. In 2010, J&LP began to research the sustainability issues regarding boxes in the reverse logistics supply chain.Their research lead to a change in production technologies to accommodate up to 100 percent recycled fiber content and solar panels on the roofs of their two U.S. factories. They also hired an engineer to lead the company’s efforts to become a “Green Cycle”-certified manufacturer.

J&LP recently purchased and installed an ISOWA FALCON state-of-the-art, four-color, high-speed flexo box machine with an extensive zero defects quality control system. This box cutting and fabrication machine is manufactured in Kasugai, Japan, by the ISOWA Corporation (www.isowa.com). There are several videos of this automated machine in operation on YouTube,” for example https://www.youtube.com/watch?v5XofTns666Aw.

J&LP’s financial information for last year follows. It is assumed the business operates 300 days per year. One note in J&LP financial statement states that the $4,906,000 of inventory does not include $886,000 in inventory allowances for excess, cancelled orders, and obsolete inventories. The note goes on to say, “Inventory management remains an area of focus as we balance the need to maintain strategic inventory levels to ensure competitive lead times versus the risk of inventory obsolescence because of changing technology and customer requirements. The box and packaging business is a dynamic industry that must quickly accommodate customer requirements, changes in forecasts, and new findings from research and development on product features and options.” The following data (in thousands of dollars $) is provided.

1. Should we consider services in the cash-to-cash conversion cycle computations?
2. How will you handle the $886,000 in obsolete inventory?
3. What is the total cash-to-cash conversion cycle for J&L Packaging, Inc. for last year?
4. What are your conclusions and final recommendations?

I do not want someone to simply answer the questions for me. I want to make sure I am doing it correctly.

Specifically, I would like help with question #3

The formula provided for cash-to-conversion is:

ARDS= Accounts receivable value/Revenue per day

APDS=Accounts payable value/Revenue per day

Revenue per day (R/D) =Total revenue/Operating days per year

Cash-to-cash conversion cycle =IDS+ARDS-APDS

Here's what I got:

Inventory days’ supply (IDS) =

Average total inventory/ Cost of goods sold per day=4,906+886=5792

Cost of goods sold per day (CGS/D) = 31,725/300 Days per year= 105.75

Cost of goods sold value/ Operating days per year

5792/105.75=54.77

IDS=54.77

IDS+ARDS= the firms receivable cycle is 80.08

ARDS= Accounts receivable value/ Revenue per day =7,593/300=25.31

APDS= Accounts payable value/ Revenue per day =9,338/300=31.13

APDS =31.13, which is how many days the firm has to pay back its bill.

Which means the firm receives it payments, “receivables” 48.95 days later.

Is this right? Help!

You have recently been hired by Swan Motors, Inc. (SMI), in its relatively new treasury management department. SMI was founded 8 years ago by Joe Swan. Joe found a method to manufacture a cheaper battery with much greater energy density than was previously possible, giving a car powered by the battery a range of 700 miles before requiring a charge. The cars manufactured by SMI are midsized and carry a price that allows the company to compete with other mainstream auto manufacturers. The company is privately owned by Joe and his family, and it had sales of $97 million last year.

SMI primarily sells to customers who buy the cars online, although it does have a limited number of company-owned dealerships. Most sales are online. The customer selects any customization and makes a deposit of 20 percent of the purchase price. After the order is taken, the car is made to order, typically within 45 days. SMI’s growth to date has come from its profits. When the company had sufficient capital, it would expand production. Relatively little formal analysis has been used in its capital budgeting process. Joe has just read about capital budgeting techniques and has come to you for help. For starters, the company has never attempted to determine its cost of capital, and Joe would like you to perform the analysis. Because the company is privately owned, it is difficult to determine the cost of equity for the company. Joe wants you to use the pure play approach to estimate the cost of capital for SMI, and he has chosen Tesla Motors as a representative company.

1. You used Tesla as a representative company to estimate the cost of capital for SMI. What are some of the potential problems with this approach in this situation? What improvements might you suggest?

You have recently been hired by Layton Motors, Inc. (LMI), in its relatively new treasury management department. LMI was founded eight years ago by Rachel Layton. Rachel found a method to manufacture a cheaper battery that will hold a larger charge, giving a car powered by the battery a range of 700 miles before requiring a recharge. The cars manufactured by LMI are midsized and carry a price that allows the company to compete with other mainstream auto manufacturers. The company is privately owned by Rachel and her family, and it had sales of $197 million last year.

LMI primarily sells to customers who buy the cars online, although it does have a limited number of company-owned dealerships. The customer selects any customization and makes a deposit of 20 percent of the purchase price. After the order is taken, the car is made to order, typically within 45 days. LMI's growth to date has come from its profits. When the company had sufficient capital, it would expand production. Relatively little formal analysis has been used in its capital budgeting process. Rachel has just read about capital budgeting techniques and has come to you for help. For starters, the company has never attempted to determine its cost of capital, and Rachel would like you to perform the analysis. Because the company is privately owned, it is difficult to determine the cost of equity for the company. Rachel wants you to use the pure play approach to estimate the cost of capital for LMI, and she has chosen Tesla Motors as a representative company. The following questions will lead you through the steps to calculate this estimate.

7. You used TSLA as a pure play company to estimate the cost of capital for LMI. Are there any potential problems with this approach in this situation and why?

Please provide steps.

Marketing

Huawei Technologies Brief History Huawei Technologies Co., Ltd. is a Chinese multinational technology company that provides telecommunications equipment and sells consumer electronics, including smartphones and is headquartered in Shenzhen, Guangdong province. The company was founded in 1987 You have been appointed as a Marketing Specialist to assist Mancosa to develop a Marketing Plan for year 2020. Please note: Your Marketing Plan must be based on market research, situation analysis and must clearly present marketing mix strategies and tactics that are likely to achieve Huawei Technologies business goals. It is important that you explain the rationale for your recommendations - why you are recommending these strategies and tactics - and why the 'client' should believe your recommended marketing strategies and implementation will be successful. Project Requirements: Develop a Marketing Plan that will help Huawei Technologies to attain a competitive advantage in a customer driven market: Report Structure: The Marketing Plan should have the following headings Each section should start on a new page. 1. Title Page:  Includes the title, submission date and your name/student number. 2. Table of Contents:  Page with major section names and their associated page numbers. 3. Executive Summary: (3)  Summary of the highlights of the entire plan.  Tip: It is easiest to write this last. 4. Situation Analysis: (10)  Summary of the key market and environmental factors, Tip: PESTEL, SWOT analysis. 5. Competitive Review: (10)  Including a focused marketing review of the company and their top three competitors. 6. Segmentation of customers (15)  Discuss the segmentation variables and select one that should be used by Huawei Technologies. 7. Marketing Mix strategies (20)  Discuss, Product, Price, Place, Promotion and the extended 3Ps. 8. Bibliography: (2)  Include all of your sources including information from articles, books, websites and other sources in Harvard style.

Huawei Technologies Brief History Huawei Technologies Co., Ltd. is a Chinese multinational technology company that provides telecommunications equipment and sells consumer electronics, including smartphones and is headquartered in Shenzhen, Guangdong province. The company was founded in 1987 You have been appointed as a Marketing Specialist to assist Mancosa to develop a Marketing Plan for year 2020. Please note: Your Marketing Plan must be based on market research, situation analysis and must clearly present marketing mix strategies and tactics that are likely to achieve Huawei Technologies business goals. It is important that you explain the rationale for your recommendations - why you are recommending these strategies and tactics - and why the 'client' should believe your recommended marketing strategies and implementation will be successful. Project Requirements: Develop a Marketing Plan that will help Huawei Technologies to attain a competitive advantage in a customer driven market: Report Structure: The Marketing Plan should have the following headings Each section should start on a new page.

1. Title Page:  Includes the title, submission date and your name/student number.

2. Table of Contents:  Page with major section names and their associated page numbers.

3. Executive Summary: (3)  Summary of the highlights of the entire plan.  Tip: It is easiest to write this last.

4. Situation Analysis: (10)  Summary of the key market and environmental factors, Tip: PESTEL, SWOT analysis.

5. Competitive Review: (10)  Including a focused marketing review of the company and their top three competitors.

6. Segmentation of customers (15)  Discuss the segmentation variables and select one that should be used by Huawei Technologies.

7. Marketing Mix strategies (20)  Discuss, Product, Price, Place, Promotion and the extended 3Ps.

8. Bibliography: (2)  Include all of your sources including information from articles, books, websites and other sources in Harvard style.

The officers of a high school senior class are planning to rent buses and vans for a class trip. Each bus can transport 35 students, requires 3 ​chaperones, and costs ​$ 1,200 to rent. Each van can transport 7 ​students, requires 1​ chaperone, and costs ​$ 90 to rent. Since there are 280 students in the senior class that may be eligible to go on the​ trip, the officers must plan to accommodate at least 280 students. Since only 30 parents have volunteered to serve as​ chaperones, the officers must plan to use at most 30 chaperones. How many vehicles of each type should the officers rent in order to minimize the transportation​ costs? What are the minimal transportation​ costs?

How do you solve this word problem?