Mareez Pharma is trying to determine the effect of its inventory and receivable turnoverratios on its cash flow cycle. Mareez Pharma sales last year (all on credit) were $5,000,000, and its net profit was 10%. Its inventory turnover was 6.0 times during theyear, and its average collection period was 40 days. Its annual cost of goods sold was$3,800,000. The firm had fixed assets totaling $1,500,000. Mareez Pharma payablesdeferral period is 50 days.Required:Calculate Mareez Pharma cash conversion cycle.Assuming Mareez Pharma holds negligible amounts of cash and marketablesecurities, calculate its total assets turnover and ROA.Suppose you have been recently hired by Mareez Pharma as CFO. Your financemanagerwho was expecting to be promoted as CFO has recommended you thatit is possible to change annual inventory turnover to 9.5 times without affectingthe sales. You know thatа.b.C.management is keenly watching: cash conversion cycle, total assets turnoverand ROA as your KPI. Would you accept your finance managerrecommendations? Why or why not?

Cash conversion cycle is the total time period taken by the firm to complete its operating cycle. It…

Mareez Pharma is trying to determine the effect of its inventory and receivable turnover ratios on its cash flow cycle. Mareez Pharma sales last year (all on credit) were $ 5,000,000, and its net profit was 10%. Its inventory turnover was 6.0 times during the year, and its average collection period was 40 days. Its annual cost of goods sold was $3,800,000. The firm had fixed assets totaling $1,500,000. Mareez Pharma payables deferral period is 50 days. Required: Calculate Mareez Pharma cash conversion cycle. a.

Mareez Pharma is trying to determine the effect of its inventory and receivable turnover ratios on its cash flow cycle. Mareez Pharma sales last year (all on credit) were $ 5,000,000, and its net profit was 10%. Its inventory turnover was 6.0 times during the year, and its average collection period was 40 days. Its annual cost of goods sold was $3,800,000. The firm had fixed assets totaling $1,500,000. Mareez Pharma payables deferral period is 50 days. Required: Calculate Mareez Pharma cash conversion cycle. a.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Grant Communications is forecasting its financial statements for the upcoming year. Highlights include: Current assets of $6 million Current ratio of 2.0 Sales of $20 million Inventory turnover ratio (Sales/Inventory) of 6 The company's CFO is concerned about the forecasted inventory turnover ratio. Her goal is cut inventory enough to obtain an inventory turnover ratio of X, which is the industry average, while still maintaining sales at $20 million. If the company can accomplish this goal, the cash generated from the cut in inventories will be used to cut accounts payable. This will give the firm a Quick Ratio [(Current Assets - Inventory) / Current Liabilities] of 1.50. What is X, the desired inventory turnover ratio? Enter your answer, truncated to 2 decimal places. For example, enter 7.777 as 7.77.
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Chastain Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash conversion cycle. Chastain's 2016 sales (all on credit) were $285000; its cost of goods sold is 80% of sales; and it earned a net profit of 6%, or $17100. It turned over its inventory 6 times during the year, and its DSO was 35 days. The firm had fixed assets totaling $37000. Chastain's payables deferral period is 40 days. Assume 365 days in year for your calculations. A. Calculate Chastain's cash conversion cycle. Round your answer to two decimal places. Do not round intermediate calculations. B.Assuming Chastain holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. Round your answers to two decimal places. Do not round intermediate calculations. C.Suppose Chastain's managers believe that the inventory turnover can be raised to 8.9 times. What would Chastain's cash conversion cycle, total assets…
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Carter Paint Company has plants in four provinces. Sales last year were $100 million, and the balance sheet year-end is similar in percent of sales to that of previous years (and this will continue in the future). All assets and current liabilities will vary directly with sales. Assume the firm is already using capital assets at full capacity. Assets Cash Accounts receivable Inventory Current assets Capital assets Total assets Assets (Click to select) (Click to select) (Click to select) Current assets (Click to select) Total assets The firm has an aftertax profit margin of 9 percent and a dividend payout ratio of 35 percent. a. If sales grow by 20 percent next year, determine how many dollars of new are needed to finance the expansion. (Do not round intermediate calculations. Enter the answer in millions. Round the final answer to 3 decimal places.) The firm needs $ Current ratio Total debt / assets b. Prepare a pro forma balance sheet with any financing adjustment made to long-term…