10. The Hopewell Pharmaceutical Company's balance sheet and income statement for last year are as follows: Balance Sheet (in Millions of Dollars) Assets Liabilities and Equity Cash and marketable $1,100 Accounts payable*** $900 securities Accounts receivable* 1,300 Accrued liabilities Inventories** 800 (salaries and benefits) 300 Other current assets 200 Other current liabilities 700 Total current assets $3,400 Total current liabilities $1,900 Plant and equipment (net) 2,300 Long-term debt and other Other assets 1,000 liabilities 1,000 Total assets $6,700 Common stock 1,800 Retained earnings 2,000
10. The Hopewell Pharmaceutical Company's balance sheet and income statement for last year are as follows: Balance Sheet (in Millions of Dollars) Assets Liabilities and Equity Cash and marketable $1,100 Accounts payable*** $900 securities Accounts receivable* 1,300 Accrued liabilities Inventories** 800 (salaries and benefits) 300 Other current assets 200 Other current liabilities 700 Total current assets $3,400 Total current liabilities $1,900 Plant and equipment (net) 2,300 Long-term debt and other Other assets 1,000 liabilities 1,000 Total assets $6,700 Common stock 1,800 Retained earnings 2,000
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
![10. The Hopewell Pharmaceutical Company's balance sheet and income statement for
last year are as follows:
CHALLENGE
Balance Sheet (in Millions of Dollars)
Assets
Liabilities and Equity
Cash and marketable
$1,100
Accounts payable***
$900
securities
Accounts receivable*
1,300
Accrued liabilities
Inventories**
800
(salaries and benefits)
300
Other current assets
200
Other current liabilities
700
Total current assets
$3,400
Total current liabilities
$1,900
Plant and equipment (net)
2,300
Long-term debt and other
Other assets
1,000
liabilities
1,000
Total assets
$6,700
Common stock
1,800
Retained eamings
2,000
Total stockholders" equity
$3,800
Total liabilities and equity
$6,700
*Assume that average accounts receivable are the same as ending accounts receivable.
**Assume that average inventory over the year was the same as ending inventory.
***Assume that average accounts payable are the same as ending accounts payable.
Income Statement (in Millions of Dollars)
Net sales
$6,500
Cost of sales
1,500
Selling, general, and administrative expenses
2,500
Other expenses
800
Total expenses
$4,800
Eamings before taxes
1,700
Тахes
680
Earmings after taxes (net income)
$1,020
a. Determine Hopewell's cash conversion cycle.
b. Give an interpretation of the value computed in Part a.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe0c468f3-78ae-4f59-bd71-f93829c5fa69%2Fdebd3349-7f34-4ef1-bb86-bb1773e655d8%2Fzsv265l_processed.png&w=3840&q=75)
Transcribed Image Text:10. The Hopewell Pharmaceutical Company's balance sheet and income statement for
last year are as follows:
CHALLENGE
Balance Sheet (in Millions of Dollars)
Assets
Liabilities and Equity
Cash and marketable
$1,100
Accounts payable***
$900
securities
Accounts receivable*
1,300
Accrued liabilities
Inventories**
800
(salaries and benefits)
300
Other current assets
200
Other current liabilities
700
Total current assets
$3,400
Total current liabilities
$1,900
Plant and equipment (net)
2,300
Long-term debt and other
Other assets
1,000
liabilities
1,000
Total assets
$6,700
Common stock
1,800
Retained eamings
2,000
Total stockholders" equity
$3,800
Total liabilities and equity
$6,700
*Assume that average accounts receivable are the same as ending accounts receivable.
**Assume that average inventory over the year was the same as ending inventory.
***Assume that average accounts payable are the same as ending accounts payable.
Income Statement (in Millions of Dollars)
Net sales
$6,500
Cost of sales
1,500
Selling, general, and administrative expenses
2,500
Other expenses
800
Total expenses
$4,800
Eamings before taxes
1,700
Тахes
680
Earmings after taxes (net income)
$1,020
a. Determine Hopewell's cash conversion cycle.
b. Give an interpretation of the value computed in Part a.
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