None Last year the company reported a sale ofUSD 8 million and an inventory turnoverratio of 4. It is now opting for a new inventorysystem that is able to reduce the firm'sinventory level and increase the firm'sinventory turnoverturnover ratio to 6 whilemaintaining the same level of sales.How much cash will be freed up?

The problem involves the determination of the freed-up cash due to the improvement in the firm's…

Answered: Last year the company reported a sale…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter21: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 1P

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Negus Enterprises has an inventory conversion period of 50 days, an average collection period of 35 days, and a payables deferral period of 25 days. Assume that cost of goods sold is 80% of sales. What is the length of the firm’s cash conversion cycle? If annual sales are $4,380,000 and all sales are on credit, what is the firm’s investment in accounts receivable? How many times per year does Negus Enterprises turn over its inventory?
How much cash will be freed up?
SJU Resources last year reported cost of goods sold of $35 million and an inventory turnover ratio of 2. The company is now adopting a new inventory system. If the new system is able to reduce the ﬁrm’s inventory level and increase the ﬁrm’s inventory turnover ratio to 3 while maintaining the same level of sales, how much cash will be freed up?
Williams & Sons last year reported sales of $127 million, cost of goods sold (COGS) of $105 and an inventory turnover ratio of 5. The company is now adopting a new inventory system. If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 7 while maintaining the same level of sales and COGS, how much cash will be freed up? Do not round intermediate calculations. Round your answer to the nearest dollar.
Williams & Sons last year reported sales of $15 million, cost of goods sold (COGS) of $12 million, and an inventory turnover ratio of 2. The company is now adopting a new inventory system. If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 6 while maintaining the same level of sales and COGS, how much cash will be freed up? Do not round intermediate calculations. Enter your answer in dollars. For example, an answer of $1.23 million should be entered as 1,230,000,000. Round your answer to the nearest dollar. $
Inventory Management Williams & Sons last year reported sales of $9 million, cost of goods sold (COGS) of $6 million, and an inventory turnover ratio of 2. The company is now adopting a new inventory system. If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 6 while maintaining the same level of sales and COGS, how much cash will be freed up? Do not round intermediate calculations. Enter your answer in dollars. For example, an answer of $1.23 million should be entered as 1,230,000,000. Round your answer to the nearest dollar.
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A company has $20 million in cost of goods sold and an inventoryturnover ratio of 2.0. If it can reduce its inventory and improve itsinventory turnover ratio to 2.5 with no loss in units sold and no changein cost of goods sold, by how much will FCF increase? ($2 million)
Which of the following statements is TRUE? When EBIT and total assets both increase by 25%, the basic earnings power will also increase O a. An increase in the quick ratio over time means that the company's liquidity position is improving. O b. approximately by 25%. A lower than the industry's average inventory turnover ratio means that the company turns over or sells O C. and replaces its inventory more times per year. A higher than industry average P/E ratio indicates the company's stock must be overvalued. d.
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The FMT Corporation is trying to determine the effect of its inventory turnover ratio and days salesoutstanding (DSO) on its cash flow cycle. FMT sales last year (all on credit) were ₱150,000, and it earneda net profit of 6%, or ₱9,000. It turned over its inventory 5 times during the year, and its DSO was 36.5days. The firm had fixed assets totalling ₱35,000. FMT payables deferral period is 40 days.a. Calculate FMT’s cash conversion cycle.b. Assuming FMT holds negligible amounts of cash and marketable securities, calculate its totalassets turnover and ROA.c. Suppose FMT Corp managers believe that the inventory turnover can be raised to 7.3 times.What would FMT’s cash conversion cycle, total assets turnover, and ROA have been if theinventory turnover had been 7.3 for the year?

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