Consider the operations of a manufacturing company that operates 340 days a year, On average it takes 55 days to sell a piece ofinventory. All its products are marked up by 12%; vendors are paid cash, sales are cash and all capital is borrowed @ 32 %. Answer thefollowing as indicated.Case 1:The invnetory turnover ratio, ITR =The annual rate of return on capital after interest payment =Case 2:Now suppose that it pays its vendors after approximayely 12 days.Under this change, the annual rate of return on capital after interest payment

Given information : Operational time = 340 days Average time for selling = 55 days Mark up = 12%…

nsider the operations of a manufacturing company that operates 340 days a year. On entory. All its products are marked up by 12%; vendors are paid cash, sales are cash Dwing as indicated. se 1: e invnetory turnover ratio, ITR =| e annual rate of return on capital after interest payment= se 2:

nsider the operations of a manufacturing company that operates 340 days a year. On entory. All its products are marked up by 12%; vendors are paid cash, sales are cash Dwing as indicated. se 1: e invnetory turnover ratio, ITR =| e annual rate of return on capital after interest payment= se 2:

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

See similar textbooks

Related questions

Q: What's the rate of return you would earn if you paid $2,880 for a perpetuity that pays $65 per year?…

A: Perpetuity is a type of payment at the regular intervals which is likely to continue forever. It is…

Q: Torrid Romance Publishers has total receivables of $2,300.00, which represents 24.00 days’ sales.…

A: Total receivable = $2300.00 Average receivable period = 24 days Turnover = 2300/(365/24) =…

Q: 10. If the net income after tax of the company is P4,000,000, starting balance of assets is P500,000…

A: "Since you have asked multiple questions, we will solve first question for you. If you want any…

Q: A company has EBITDA of $600 million, interest payments of$60 million, lease payments of $40…

A: EBITDA = $600 million Interest payments = $60 million Lease payment = $40 million Principal payment…

Q: The following table includes quarterly working capital levels for your firm for the next year.…

A: The monetary measure known as working capital is utilized to describe the discrepancy between a…

Q: pvn.5

A: The objective of the question is to verify the correctness of the given financial ratios and metrics…

Q: For the year ended December 31, 2019, Settles Inc. earned an ROI of 9.6%. Sales for the year were…

Q: Suppose Naboo Manufacturing's sales increase 20% over the next year. Assuming that all asset…

A: Cash 10000

Q: If Norm had the following cash inflows and cash outflows over a 15-year period, and the account was…

A: FV=PV*(1+r)n

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: (Cash conversion cycle) Sims Electric Corp. has been striving for the last five years to improve its…

A: Cash conversion cycle of a business organization ascertains the time period which a company takes to…

Q: Aaish-o-Ishrat Technology is considering changes in the working capital policies to improve its cash…

A: Given data sales = 3,250,000net profit margin = 7%sales outstanding = 41 daysinventory turn over = 6…

Q: Assume a firm has a cash cycle of 54 days and an operating cycle of 77 days. What is its payables…

A: Operating cycle :— It is the sum of days in receivable and days in inventory. Cash Cycle :— It is…

Q: Please Give the answer of this question

A: Step 1: Introduction to the Account Receivable:Account receivable is a current asset created by a…

Q: Lever Age pays a(n) 8% rate of interest on $10.6 million of outstanding debt with face value $10.6…

A: Annual interest = Face Value of debt x Rate of interest x period = $10,600,000 x 8% = $848,000

Q: What is the seven-year future value? The units of your answer should be 'billion dollars'. Input…

A: Under Compound Interest Method, interest is being provided on the accumulated opening balance of the…

Q: At year-end, Sally Company has cash of $10,000, current accounts receivable of $10,000, merchandise…

A: Lets understand the basics. Acid test ratio is also known as quick ratio. It is a ratio which…

Concept explainers

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.

Question

Consider the operations of a manufacturing company that operates 340 days a year, On average it takes 55 days to sell a piece of
inventory. All its products are marked up by 12%; vendors are paid cash, sales are cash and all capital is borrowed @ 32 %. Answer the
following as indicated.
Case 1:
The invnetory turnover ratio, ITR =
The annual rate of return on capital after interest payment =
Case 2:
Now suppose that it pays its vendors after approximayely 12 days.
Under this change, the annual rate of return on capital after interest payment

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Kross Ltd, a company that sells bicycles, had sales last month of Rs 40,000, EBIT of Rs 4,000, net income of Rs 1800, an interest expense of Rs 1000, and earnings per share (EPS) of Rs 1.8. The DOL was 6.0. Sales for the coming month are expected to be Rs. 44,000. a) Calculate DFL and DCL. b) What was the profit before taxes last month? c) What is the profit before taxes expected to be for the coming month? d) What is the EPS expected to be for the coming month?
Last year Dania Corporation's sales were $525 million. If sales grow at 11.3% per year, how large (in millions) will they be 6 years later? O a. $880.95 million Ob. $998.00 million Oc. $584.33 million Od. $896.68 million Oe. $1,078.00 million
Answer the following
Dimeback Co. has total assets of $8,500,000 and a total asset turnover of 1.8 times. If the return on assets is 8.5 percent. Required: What is its profit margin? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Profit margin
Aggarwal Inc. buys on terms of 2/10, net 30, and it always pays on the 30th day. The CFO calculates that the average amount of costly trade credit carried is $350,000. What is the firm's average accounts payable balance? Assume a 365-day year. Please explain process and show calculations.
A firm's current profits are $450,000. These profits are expected to grow indefinitely at a constant annual rate of 3 percent. If the firm's opportunity cost of funds is 6 percent, determine the value of the firm: Instructions: Round your responses to 2 decimal places. a. The instant before it pays out current profits as dividends. $ million b. The instant after it pays out current profits as dividends. $ million
Pls do fast..i will rate instantly for sure Try to give solution in typed form!!
24. Following are a company's income statement at the end of the last year (year 0) and coming year (year 1). Each year, the company's accounts receivable need to be main- tained at 5% of sales. The company's inventory and accounts payable do not change. Capital expenditure in year 1 is $10,000. Year Sales Depreciation EBIT Taxes (a) What is the free cash flow in year 17 1 85,000 92,000 20,000 22,000 17,000 19,500 3,500 3,700 0 (b) The company's business is mature, so it is expected to generate the same amount of free cash flow every year forever. The firm-specific discount rate is 7%, and the risk-free rate is 2%. What is the enterprise value of the company? (c) The company has $150,000 in cash and $50,000 in debt. In addition, it has 7000 shares outstanding. What is the company's stock price per share?
1. Suppose you are given the following information for Bayside Bakery: sales = $30,000; addition to retained earnings = $4,221; dividends paid = $469; interest expense = $1,300; tax rate = 30 percent. What is the EBIT?
1. What this ratio tells us about? 2016 2017 2018 2019 Number of days of payables (purch.) Net operating cycle Operating cycle 82.50 days 66.95 days 54.02 days 47.23 days 2. Do you like the situation in this company? 3. What are your recommendationd to improve the situation?
Aggarwal Inc. buys on terms of 1/10, net 20, and it always pays on the 20th day. The CFO calculates that the average amount of costly trade credit carried is $750,000. What is the firm's average accounts payable balance? Assume a 365-day year. a. $1,000,000 b. $1,492,500 c. $1,500,000 d. $1,125,000 e. $1,113,750
Nelto deposits $2,500 in a bank account that pays 3% interest compounded quarterly. Two years later, how much do they have in their bank account? C 1 t=0 n Cash Flow Diagram ….....…... Time Value of Money (TVM) Framework PV PMT FV type How to compute using Excel? -function( rate, nper, pmt, [PV]. [type]) n CPT

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS