Q4: Aztec Products wishes to evaluate its cash conversion cycle (CCC). Research by one of the firm's financial analysts indicates that on average the firm holds items in inventory for 65 days, pays its suppliers 35 days after purchase, and collects its receivables after 55 days. The firm's annual sales (all on credit) are about $2.1 billion, its cost of goods sold represent about 67 percent of sales, and purchases represent about 40 percent of cost of goods sold. Assume a 365- day year. a. What is Aztec Products' operating cycle (OC) and cash conversion (CCC)? b. How many dollars of resources does Aztec have invested in (1) inventory, (2) accounts receivable, (3) accounts payable, and (4) the total CCC? c. If Aztec could shorten its cash conversion cycle by reducing its inventory holding period by 5 days, what effect would it have on its total resource investment found in part b?

Q4: Aztec Products wishes to evaluate its cash conversion cycle (CCC). Research by one of the firm's financial analysts indicates that on average the firm holds items in inventory for 65 days, pays its suppliers 35 days after purchase, and collects its receivables after 55 days. The firm's annual sales (all on credit) are about $2.1 billion, its cost of goods sold represent about 67 percent of sales, and purchases represent about 40 percent of cost of goods sold. Assume a 365- day year. a. What is Aztec Products' operating cycle (OC) and cash conversion (CCC)? b. How many dollars of resources does Aztec have invested in (1) inventory, (2) accounts receivable, (3) accounts payable, and (4) the total CCC? c. If Aztec could shorten its cash conversion cycle by reducing its inventory holding period by 5 days, what effect would it have on its total resource investment found in part b?

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

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Average daily sales of Chase Pumping Goods are Rs. 100,000. Average accounts receivable of Chase has Rs. 2 million and in inventory Rs.5 million. The company’s payables deferral period is 30 days. What is the length of the company’s cash conversion cycle?
Your company collected $340.00 million and spent $381.00 million this month. If previous month's cash position (cumulative cash) is $14.31 million and your company target cash position is $20.00 million. What's your company's cash surplus/shortage at the end of this month, with positive number indicates a surplus and negative number indicates a shortage? Note: your answer should be in millions of dollars
Question. Semis Inc. has an average age of inventory of 70 days, an average collection period of 60 days and an average payment period of 60 days. The firm's total annual outlays for operating cycle investments are $3.65 million. Assuming a 365-day year, how much financing is required to support its cash conversion cycle?
Subject:- accounting
Parramore Corp has $10 million of sales, $2 million of inventories, $4 million of receivables, and $3 million of payables. Its cost of goods sold is 75% of sales, and it finances working capital with bank loans at a 7% rate. Assume 365 days in year for your calculations. A. What is Parramore's cash conversion cycle (CCC)? Do not round intermediate calculations. Round your answer to two decimal places. days B. If Parramore could lower its inventories and receivables by 12% each and increase its payables by 12%, all without affecting sales or cost of goods sold, what would be the new CCC? Do not round intermediate calculations. Round your answer to two decimal places. days C. How much cash would be freed up, if Parramore could lower its inventories and receivables by 12% each and increase its payables by 12%, all without affecting sales or cost of goods sold? Write out your answer completely. For Example, 13.2 million should be entered as 13,200,000. Do not round intermediate…
Compute Cash Conversion Cycle for Competing Firms Kellogg’s Company and General Mills compete in the consumer packaged goods (CPG) sector. Refer to the following 2018 financial data for the two companies to answer the requirements. $ millions K GIS Total revenue $14,575.0 $16,768.0 Cost of sales and services 9,849.0 10,312.9 Average accounts receivable 1,382.0 2,585.0 Average inventory 2,302.0 1,562.9 Average accounts payable 2,348.0 3,461.0 Note: Complete the entire question in Excel and format each answer to two decimal places. Then enter the answers into the provided spaces below with two decimal places. a. Compute the following measures for both companies. 1. Days sales outstanding (DSO) Company DSO K Answer GIS Answer 2. Days inventory outstanding (DIO) Company DIO K Answer GIS Answer 3. Days payable outstanding (DPO) Company DPO K Answer GIS Answer 4. Cash conversion cycle (CCC) Company…
None
The A Company wishes to apply the Miller-Orr model to manage its cash investment. A's management has determined that the cost of either investing in or selling marketable securities is $200. By looking at A Company’s past cash needs, they have determined that the variance of daily cash flows is $10,000. A Company’s opportunity cost of cash, per day, is estimated to be 0.05%. A management has figured, based on their experience dealing with the cash flows of the company, that there should be a cushion— a safety stock—of cash of $20,000. Calculate the lower limit, the return point, and the upper limit based on the Miller-Orr model of cash management.
Calculate the 2019 cash conversion cycle for Buy-Right. Assume that Buy-Right decided to improve it's cash conversion cycle by decreasing it's inventory conversion days to 60. The company also outsourced the collection of its accounts receivable book to an independent 3rd party, which resulted in an a new collection period of 30 days. Calculate the ZAR effect of the net cash flow to the company. Assume that sales for 2020 is expected to grow at Just over 20% to reach R1580m. Assuming that the cash conversion cycle remains constant for 2020, would Buy-right have sufficient working capital to fund the envisaged sales for 2020?
Please revise question 46 to get an answer in this options An analyst has recently been hired to improve the performance of SL Energy Corporation, which has been experiencing a severe cash shortage. As one part of your analysis, the analyst wants to determine the firm’s cash conversion cycle. Using the following information and a 365-day year: Current inventory = $160,000; Annual sales = $1,095,000; Accounts receivable = $180,000; Accounts payable = $36,000; Total annual purchases = $730,000. Calculate the firm’s inventory conversion cycle. 18 days 70 days 75 days 80 days Based on information from Question 46~48, Calculate the firm’s cash conversion cycle (CCC). 122 days 129 days 147 days 128 days

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