Cash management is a very important function of managers. Companies need to manage their operations in a way that they can sustain growth and yet not run out of cash. Consider the case of the Extensive Enterprise Inc.: Extensive Enterprise Inc. has forecasted sales of $30,000,000 for next year and expects its cost of goods sold (COGS) to remain at 60% of sales. Currently, the firm holds $2,900,000 in inventories, $1,800,000 in accounts receivable, and $2,700,000 in accounts payable. A. Approximately how long does it take Extensive Enterprise to convert its raw materials to its finished products and then to sell those goods? (Note: In all calculations, assume that there are 365 days in a year.) 55.87 days 44.11 days 58.81 days 64.69 days B. On average, it takes from the time a sale is made until the time cash is collected from customers. (Calculation required) C. Extensive Enterprise relies on customer credit when it buys raw materials from its suppliers. On average, it takes after the firm purchases materials before it sends cash to its suppliers. (Calculation Required)
Cash management is a very important function of managers. Companies need to manage their operations in a way that they can sustain growth and yet not run out of cash. Consider the case of the Extensive Enterprise Inc.: Extensive Enterprise Inc. has forecasted sales of $30,000,000 for next year and expects its cost of goods sold (COGS) to remain at 60% of sales. Currently, the firm holds $2,900,000 in inventories, $1,800,000 in accounts receivable, and $2,700,000 in accounts payable. A. Approximately how long does it take Extensive Enterprise to convert its raw materials to its finished products and then to sell those goods? (Note: In all calculations, assume that there are 365 days in a year.) 55.87 days 44.11 days 58.81 days 64.69 days B. On average, it takes from the time a sale is made until the time cash is collected from customers. (Calculation required) C. Extensive Enterprise relies on customer credit when it buys raw materials from its suppliers. On average, it takes after the firm purchases materials before it sends cash to its suppliers. (Calculation Required)
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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Cash management is a very important function of managers. Companies need to manage their operations in a way that they can sustain growth and yet not run out of cash.
Consider the case of the Extensive Enterprise Inc.:
Extensive Enterprise Inc. has forecasted sales of $30,000,000 for next year and expects its cost of goods sold (COGS) to remain at 60% of sales. Currently, the firm holds $2,900,000 in inventories, $1,800,000 in accounts receivable, and $2,700,000 in accounts payable.
A. Approximately how long does it take Extensive Enterprise to convert its raw materials to its finished products and then to sell those goods? (Note: In all calculations, assume that there are 365 days in a year.)
55.87 days
44.11 days
58.81 days
64.69 days
B. On average, it takes from the time a sale is made until the time cash is collected from customers. (Calculation required)
C. Extensive Enterprise relies on customer credit when it buys raw materials from its suppliers. On average, it takes after the firm purchases materials before it sends cash to its suppliers. (Calculation Required)
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