Company X reported the following information for the last fiscal year. COMPANY X Assets As of Liabilities and Equity 12/31/2021 Inventories USD 200 000
Company X reported the following information for the last fiscal year. COMPANY X Assets As of Liabilities and Equity 12/31/2021 Inventories USD 200 000
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
Related questions
Question
Cash conversion cycle: Company X reported the following information for the last fiscal
year.
| COMPANY X | |||
| Assets | As of | Liabilities and Equity | |
| 12/31/2021 | |||
| Inventories | USD 200 000 | ||
| Accounts Receivable | 180 000 | Borrowings | USD 190 000 |
| Cash and financial assets | 25 000 | Accounts payable and | 200 000 |
| available for sale | accruals | ||
| Other current assets | 18 000 | ||
| Total current assets | USD 423 000 | Total current liabilities | USD 390 000 |
| Fixed Assets | 500 000 | Long-term debt | 150 000 |
| Equity | 383 000 | ||
| Total Assets | USD 923 000 | Total Liabilities & | USD 923 000 |
| Equities | |||
| Net sales (credit) | USD 800 000 | ||
| Cost of goods sold | 380 000 |
a. Calculate the firm’s cash conversion cycle and operating cycles
b. What is the financing strategy of Company X? Aggressive or conservative? Is the strategy
already proper enough for the company? Please give your recommendation for them!
Transcribed Image Text:a). Cash conversion cycle: Company X reported the following information for the last fiscal
year.
Company X
As of
Assets
Liabilities and Equity
12/31/2021
Inventories
USD 200 000
Accounts Receivable
180 000
Borrowings
USD 190 000
25 000
Accounts payable and
200 000
Cash and financial assets
available for sale
accruals
Other current assets
18 000
Total current assets
USD 423 000 Total current liabilities
USD 390 000
Fixed Assets
500 000
Long-term debt
150 000
Equity
383 000
Total Assets
USD 923 000 Total Liabilities &
USD 923 000
Equities
Net sales (credit)
USD 800 000
Cost of goods sold
380 000
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