Give true solution Canadian Products is concerned about managing its operatingassets and liabilities efficiently. Inventories have an average age of110 days, and accounts receivable have an average age of 50 days.Accounts payable are paid approximately 40 days after they arise.The firm has annual sales of $36 million, its cost of goods soldrepresents 75 percent of sales, and its purchases represent 70percent of the cost of goods sold. Assume a 365-day year.a. Calculate the firm's operating cycle (OC).b. Calculate the firm's cash conversion cycle (CCC).c. Calculate the amount of total resources Canadian Products hasinvested in its CCC.d. Discuss how management might be able to reduce the amount oftotal resources invested in the CCC.

Explanation of Operating Cycle (OC): The operating cycle refers to the total time it takes for a…

Answered: Canadian Products is concerned about…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter16: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 11P

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Berry Manufacturing turns over its inventory 8 times each year, has an Average Payment Period of 35 days and has an Average Collection Period of 60 days. The firm’s annual sales are $3.5 million. Assume there is no difference in the investment per dollar of sales in inventory, receivable, and payables and that there is a 365-day year. A. Calculate the Firm’s Operating Cycle. B. Calculate the Firm’s Cash Conversion Cycle. C. Calculate the Firm’s Daily Cash Operating Expenditure.
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Suppose that Dunn Industries has annual sales of $2.3 million, cost of goods sold of $1,650,000, average inventories of $1,116,000, and average accounts receivable of $750,000. Assume that all of Dunn’s sales are on credit.What will be the firm’s operating cycle? (Use 365 days a year. Do not round intermediate calculations. Round your final answer to 2 decimal places.)
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Libscomb Technologies' annual sales are $6,750,624 and all sales are made on credit, it purchases $3,062,806 of materials each year (and this is its cost of goods sold). Libscomb also has $571,915 of inventory, $1,475,000 of accounts receivable, and $1,400,000 of accounts payable. Assume a 365 day year. What is Libscomb’s Receivables Period (in days)?
Owen's Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity. Assets Cash Accounts receivable Inventory Current assets Fixed assets Total assets New funds $7 25 28 $ 60 45 Balance Sheet (in $ millions) $ 105 Liabilities and Stockholders' Equity Accounts payable Accrued wages Accrued taxes Current liabilities Notes payable Common stock Retained earnings Total liabilities and stockholders' equity X Answer is complete but not entirely correct. $ 11,900,000 X $ 20 7 13 $ 40 Owen's Electronics has an aftertax profit margin of 10 percent and a dividend payout ratio of 45 percent. If sales grow by 20 percent next year, determine how many dollars of new funds are needed to finance the…
Libscomb Technologies' annual sales are $6,974,991 and all sales are made on credit, it purchases $3,511,535 of materials each year (and this is its cost of goods sold). Libscomb also has $550,869 of inventory, $522,928 of accounts receivable, and $477,584 of accounts payable. Assume a 365 day year. What is Libscomb’s Inventory Turnover?
If a firm has sales of $25,689,00 a year, and the average collection period for the industry is 45 days, what should this firm's accounts receivable be in the firm is comparable to the industry?
Owen's Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity. Assets Cash Accounts receivable Inventory Current assets Fixed assets Total assets Balance Sheet (in $ millions) Liabilities and Stockholders' Equity $ 2 Accounts payable 22 24 $ 48 43 Accrued wages Accrued taxes Current liabilities Notes payable Common stock Retained earnings $91 Total liabilities and stockholders' equity $ 16 4 10 $30 Answer is complete but not entirely correct. New funds $ 8,075,000 > 12 17 32 $ 91 Owen's Electronics has an aftertax profit margin of 6 percent and a dividend payout ratio of 45 percent. If sales grow by 20 percent next year, determine how many dollars of new funds are needed to…
Owen's Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity. Cash Accounts receivable Inventory Current assets Fixed assets Total assets New funds Assets E 122 TOLCIE E S Balance Sheet (in $ millions) E $ 12 27 28 $ 67 45 N Owen's Electronics has an aftertax profit margin of percent and a dividend payout ratio of 40 percent. If sales grow by 30 percent next year, determine how many dollars of new funds are needed to finance the growth. Note: Do not round intermediate calculations. Enter your answer in dollars, not millions, (e.g., $1,234,567). $ 112 Liabilities and Stockholders' Equity Accounts payable Accrued wages Accrued taxes Current liabilities Notes payable Common stock…
Owen's Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity. Assets Cash Accounts receivable Inventory Current assets Fixed assets Total assets $ 10 32 33 $ 75 New funds $118 Balance Sheet (in $ millions) Liabilities and Stockholdera Equity Accounts payable Accrued wages Accrued taxes Current liabilities Notes payable Common stock Retained earnings Total liabilities and stockholders' equity $18 7 11 $ 36 14 17 51 $118 TOUS REPOR Owen's Electronics has an aftertax profit margin of 9 percent and a dividend payout ratio of 50 percent. STA U SLU KUTEN HOTEL If sales grow by 25 percent next year, determine how many dollars of new funds are needed to finance the growth. (Do not…

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