Cash conversion cycle Christie Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash conversion cycle. Christie's 2012 sales (all on credit) were $287,000; its cost of goods sold is 80% of sales; and it earned a net profit of 8%, or $22,960. It tumed over its inventory 5 times during the year, and its DSO was 39 days. The firm had fixed assets totaling $40,000. Christie's payables deferral period is 50 days. Assume 365 days in year for your calculations. a. Calculate Christie's cash conversion cyde. Round your answer to two decimal places. days b. Assuming Christie holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. Round your answer to two decimal places. Total assets ROA t. Suppose Christle's managers belleve that the inventory turnover can be raised to 8.4 times. What would Christie's cash conversion cyde, total assets turnover, and ROA have been iF the Inventory turnover had been 8.4 for 20127 Cash conversion cycle days Total assets ROA
Cash conversion cycle Christie Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash conversion cycle. Christie's 2012 sales (all on credit) were $287,000; its cost of goods sold is 80% of sales; and it earned a net profit of 8%, or $22,960. It tumed over its inventory 5 times during the year, and its DSO was 39 days. The firm had fixed assets totaling $40,000. Christie's payables deferral period is 50 days. Assume 365 days in year for your calculations. a. Calculate Christie's cash conversion cyde. Round your answer to two decimal places. days b. Assuming Christie holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. Round your answer to two decimal places. Total assets ROA t. Suppose Christle's managers belleve that the inventory turnover can be raised to 8.4 times. What would Christie's cash conversion cyde, total assets turnover, and ROA have been iF the Inventory turnover had been 8.4 for 20127 Cash conversion cycle days Total assets ROA
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
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Transcribed Image Text:Cash conversion cycle
Christie Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash conversion cycle. Christie's 2012 sales (all on credit) were
$287,000; its cost of goods sold is 80% of sales; and it earned a net profit of 8%, or $22,960. It tumed over its inventory 5 times during the year, and its DSO was 39 days. The firm had fixed
assets totaling $40,000. Christie's payables deferral period is 50 days. Assume 365 days in year for your calculations.
a. Calculate Christie's cash conversion cyde. Round your answer to two decimal places.
days
b. Assuming Christie holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. Round your answer to two decimal places.
Total assets
ROA
t. Suppose Christle's managers belleve that the inventory turnover can be raised to 8.4 times. What would Christie's cash conversion cyde, total assets turnover, and ROA have been iF the
Inventory turnover had been 8.4 for 20127
Cash conversion cycle
days
Total assets
ROA
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