Butler-Huron Company’s balance sheet and income statement for last year are as follows: Balance Sheet (in Millions of Dollars)                  Assets                                                                  Liabilities and Equity                      Cash and marketable securities           $142        Accounts payable***         $808 Accounts receivable*                              941        Accrued liabilities     Inventories**                                         1,607        (salaries and benefits)        508 Other current assets                                  35         Other current liabilities       534 Total current assets                             $2,725        Total current liabilities    $1,850 Plant and equipment (net)                     3,029         Long-term debt and other     Other assets                                          5,796                      liabilities              2,228 Total assets                                          $5,796         Common stock                   146                                                                                    Retained earnings         1,572                                                                              Total stockholders’ equity   $1,718                                                                              Total liabilities and equity    $5,796

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
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The Butler-Huron Company’s balance sheet and income statement for last year are as follows:
Balance Sheet (in Millions of Dollars)
                
Assets                                                                  Liabilities and Equity    
                
Cash and marketable securities           $142        Accounts payable***         $808
Accounts receivable*                              941        Accrued liabilities    
Inventories**                                         1,607        (salaries and benefits)        508
Other current assets                                  35         Other current liabilities       534
Total current assets                             $2,725        Total current liabilities    $1,850
Plant and equipment (net)                     3,029         Long-term debt and other    
Other assets                                          5,796                      liabilities              2,228
Total assets                                          $5,796         Common stock                   146
                                                                                   Retained earnings         1,572
                                                                             Total stockholders’ equity   $1,718
                                                                             Total liabilities and equity    $5,796
                
*Assume that all sales are credit sales and that average accounts receivable are the same
as ending accounts receivable.
**Assume that average inventory over the year was the same as ending inventory.
***Assume that average accounts payable are the same as ending accounts payable.

Income Statement (in Millions of Dollars)
  
Net sales                                                         $14,248
Cost of sales                                                      10,777
Selling, general, and administrative expenses    1,950
Other expenses                                                      868
Total expenses                                                 $13,595
Earnings before taxes                                             653
Taxes                                                                       261
Earnings after taxes (net income)                          $392
 Assume that there are 365 days per year.
a.    Determine Butler-Huron’s cash conversion cycle. Round intermediate calculations and answer to one decimal place.
  _______  days
b.    Determine Butler-Huron’s cash conversion cycle assuming that 75 percent of annual sales are credit sales (that is, 25% represent cash sales). Round intermediate calculations and answer to one decimal place.
  _______  days

c.     Determine Butler-Huron's cash conversion cycle assuming that 45 percent of annual sales are credit sales. Round immediate calculations and answer to one decimal place.  _______ days

 

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Please look at part 3 (c) again. It is incorrect as shown.

Credit sales=45% sales= 0.45 x 14248

Cash conversion cycle=54.43+23.680.45−27.37=79.68 days54.43+23.680.45-27.37=79.68 days

Cash conversion cycle=79.68 days.

I am also having trouble with part 3.  Thank you.
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