Garrett Industries turns over its inventory six times each year; it has an average collection period of 35 days and an average payment period of 30 days. The firm’s annual sales are $ 5 million, costs of goods sold $ 1 million while other operating costs excluding depreciation $ 2 million.   Based on the data find the firm’s cash conversion cycle and resource investment requirement if it makes the following changes simultaneously:   (1) Shortens the average age of inventory by 5 days. (2) Speeds the collection of accounts receivable by an average of 10 days. (3) Extends the average payment period by 10 days.   If the firm pays 13% WACC, by how much, if anything,  could it reduce annual costs of working capital financing?

Q: 13) A trucking company evaluates its fleet of vehicles. According to its balance sheet, a three- van…

A: Factors used can be found in a compound interest table. (A/P, 15%, 6)=0.2642(A/G, 15%, 6)=2.097

Q: Columbus Corp. has annual sales of $80, 000, 000; its average inventory is $20, 000, 000; and its…

A: Free cash flow refers to the cash that is generated after considering the cash outflows i.e.…

Q: Margetis Inc. carries an average inventory of $750,000. Its annual Sales are $10 million, its cost…

A: Variables in the question: Average inventory=$750000Annual sales=$10,000,000COGS=$7500000 (75% of…

Q: Calculate the cash conversion cycle. Round your answer to the nearest whole number.   days…

A: Information Provided: COGS = $144,000 (60% of sales) Inventory Turnover = 30x Accounts Receivable =…

Q: The Thompson Corporation projects an increase in sales from $1.5 million to $2 million, but it needs…

A: Trade credit is a method of purchasing products or services from a supplier with an agreement to pay…

Q: Crane Specialties just purchased inventory-management computer software at a cost of $1,475,950.…

A: Solution given below Explanation:

Q: Menendez Corporation expects to sell $ 12 million. Costs, excluding depreciation tion, will…

A: Data given: Sales                                   = $12 milion Cost  (75% of Sales)           = $…

Q: Stratosphere Wireless is examining its cash conversion cycle. The company expects its cost of goods…

A: Cash Conversion Cycle is a metric that expresses the length of time (in days) that it takes for a…

Q: Final Four Hospitality LLC operates a chain of sports-bar restaurants and expects its cost of goods…

A: Days inventory outstanding=365Inventory turnover ratio

Q: considering granting credit to retailers with total assets as low as $400,000. Currently the lowest…

A:

Q: evenues are currently $1 million and are projected to stay flat. A new inventory management system…

A:

Q: The following tables contain financial statements for Dynastatics Corporation. Although the company…

A: Net fixed assets grow by $200, which is 25% of the current value of $800. Therefore, for the…

Q: Aqua Corp. is considering a change in marketing strategy which would cost $100,000 per year…

A: The cash conversion cycle shows that how effectively the company's managers deal with their working…

Q: ABC has a problem with its cash conversion cycle. Based on ecords, ABC has receivables, inventory…

A: Debtor Collection period id the period in which normally debtor paid their due to company. Inventory…

Q: A Pumpkin Pie Manufacturing Company pays on the tenth day after purchase. The average collection…

A: The question is related to Working Capital Management. The Cash Conversion cycle is calculated with…

Q: JB Hunt Corp. has annual sales of $80,000,000; its average inventory is $20,000,000; and its average…

A:

Q: Your income is $80,000 a year. Bonds earn 6.5% interest. Converting from bonds to cash costs $25 per…

A: Given:' Annual cash demand (C)  = 80000 Conversion cost (B)= $25 Interest rate (k)= 6.5%

Q: Minden Company introduced a new product last year for which it is trying to find an optimal selling…

A: Compute present year's net operating income or loss:

Q: ntonio is an analyst at Barrilla Group. The firm turns over its inventory 5 times each year. It has…

A: Cash conversion cycle tells that how much period is required to collect money from customer and…

Q: Earnings will Increase/Decrease

A: A cash flow statement refers to the statement that is helpful in tracking the cash movement in an…

Q: Fires Inc. has a cash conversion cycle of 3 weeks. It has a receivable turnover of 45 and disburse…

A: Return on assets indicates the firm's profitability on total assets. It can be calculated by…

Q: Required: a1. Produce an income statement for 2020. Assume that net working capital will equal 50%…

A: Information Provided: Increase in net fixed assets = $200,000 Revenues to Total assets = 1.50 Annual…

Q: Viron Corporation has a cash conversion cycle of 100 days and a bank credit line of $5 million at 5%…

A: Cash conversion cycle refers to the number of days which has incurred in converting the investment…

Q: Given the followeng information, perform a simple, annual break even analyis State the formula,…

A: Break-even point- It is a point at which a company's revenue is equal to all the expense of the…

Q: Last year Minden Company introduced a new product and sold 25, 200 units of it at a price of $93 per…

A: Vreak-even point refers to the point at which the sale price equal to the purchase price results in…

Q: ABC company currently sells 1500 units of printers per year and has a Operating Cash Flow (OCF) of…

A: Formula Degree of operating leverage       =  Contribution margin / Operating…

Q: Compute the projected after-tax operating cash flow for Steber during the coming year.

A: Operating Cash Flow: These are cash flows of the firm generated from the normal operations. These…

Q: CCC Corp. has annual turnovers of inventory, receivables, and payables of 12, 18, 8 respectively.…

A: Difference in cash conversion cycle = cash conversion cycle of CCC Corporation - Cash conversion…

Q: Oriole Specialties just purchased inventory-management computer software at a cost of $ 1,578,950.…

A: Payback period is the traditional capital budgeting method where time value is not giving any…

Q: EWELL Processing Company is engaged in the manufacture of rattan furniture primarily designed for…

A: Cash conversion cycle is no. of days taken by a company to convert its inventory into cash flow from…

Q: XYZ has determined that market dynamics will result in some annual variations in the numbers they…

A: The customer lifetime value is to be computed by multiplying the average purchase value of the…

Q: A Pumpkin Pie Manufacturing Company pays on the tenth day after purchase. The average collection…

A: The question is related to Working Capital Management. The Cash Conversion cycle is calculated with…

Q: Steber Packaging Inc. expects sales next year of $40 million. Of this total, 45 percent is expected…

A: Concept. Computation of cash flows. Net cash flows = cash inflows - cash outflows. Changes in…

Q: The following tables contain financial statements for Dynastatics Corporation. Although the company…

A: Solution Balance sheet is a statement of  business assets , liabilities and owners equity as of any…

Q: Flamengo Co is a sporting goods manufacturing company. Last year, report the following information:…

A: Profit margin refers to how much profit earn by a company from its total sales made during the year.

Q: Berry Manufacturing turns over its inventory 8 times each year, has an Average Payment Period of 35…

A: Cash conversion cycle is defined as the metric, which helps in expressing the time when they used to…

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.