Reference no: EM131060463
Multiple changes in cash conversion cycle Garrett Industries turns over its inventory six times each year; it has an average collection period of 45 days and an average payment period of 30 days. The firm’s annual sales are $3 million. Assume that there is no difference in the investment per dollar of sales in inventory, receivables, and payables, and assume a 365-day year.
a. Calculate the firm’s cash conversion cycle, its daily cash operating expenditure, and the amount of resources needed to support its cash conversion cycle.
b. Find the firm’s cash conversion cycle and resource investment requirement if it makes the following changes simultaneously.
(1) Shortens the average age of inventory by 5 days.
(2) Speeds the collection of accounts receivable by an average of 10 days.
(3) Extends the average payment period by 10 days.
c. If the firm pays 13% for its resource investment, by how much, if anything, could it increase its annual profit as a result of the changes in part b?
d. If the annual cost of achieving the profit in part c is $35,000, what action would you recommend to the firm? Why?
Considering the purchase of new log flume ride
: The Ocean City water park is considering the purchase of a new log flume ride. The cost to purchase the equipment is 3,500,000 and it will cost an additional 250,000 to have it installed. Using the Goal Seek tool, calculate the minimum ticket price t..
|
Evaluate the financial performance of the company
: David Chan operates Speedy Delivery Service Company, a fleet of delivery trucks in a large metropolitan area, and has just completed his first full year in business. During the year, the company billed $420,000 for delivery services. Prepare an incom..
|
The main cost of the operation of commercial banks
: Which of the following is the main cost of the operation of commercial banks?
|
Percentage change in price for a basket of goods
: Which of the following rate measures the percentage change in price for a basket of goods and services consumed by a "typical" household --- the consumer price index?
|
Calculate the firm cash conversion cycle
: Multiple changes in cash conversion cycle Garrett Industries turns over its inventory six times each year; it has an average collection period of 45 days and an average payment period of 30 days. Calculate the firm’s cash conversion cycle, its daily ..
|
Arithmetic average return on crash-n-burns stock
: You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 17 percent, –4 percent, 20 percent, 12 percent, and 10 percent. What was the arithmetic average return on Crash-n-Burn’s stock over this five-year period..
|
Employee development and psychological tests
: From the scenario and the first e-Activity, predict two (2) changes that will occur in the next five (5) years in relation to the 60 percent participation rate of women in the workforce
|
Biblical view of science technology and the business world
: Write apaper on the biblical view of science, technology, and the business world. Back up your conclusions with examples from your reading. How do you think the eighteenth-century world that gave rise to the Utilitarians reacted to the biblical view?
|
Thucydides versus plato
: Write a paper on Thucydides versus Plato on the nature of the Good Life. Some have claimed that Thucydides is making empirical claims, whereas Plato is making normative claims. Is that true? Support your answer in your paper.
|