Reference no: EM133160177
Question - WORKING CAPITAL MANAGEMENT - INSTRUCTIONS: Satisfy what is being asked for. Round off final answers to two (2) decimal places, omit the currency sign and include comma as separator. Example, if your answer is one million pesos, it should be presented as 1,000,000.00.
QUESTION 1 - Sonic Masters Inc. would like to evaluate its cash conversion cycle (CCC). Research by one of the firm's financial analysts indicates that on average the firm holds items in inventory for sixty five days, pays its suppliers thirty five days after purchase, and collects its receivables after fifty five days. The firm's annual sales (all on credit) are about P2.1 billion, its cost of goods sold represent about 67 percent of sales, and purchases represent about 40 percent of cost of goods sold. Assume a 365-day year.
1. What is the firm's CCC?
2. What is the firm's OC?
QUESTION 2 - Pintura Corp. stocks paint in its warehouse and sells it online on its Facebook page. The store stocks several brands of paint; however, its biggest seller is UC-green paint. The company wants to determine the optimal order size and total inventory cost for UC-green paint given an estimated annual demand of 10,000 gallons of paint, an annual carrying cost of $0.75 per gallon, and an ordering cost of $150 per order.
1. What is the company's EOQ?
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