General Accounting Stewart and Company currently has a production cycle of 40 days,a collection cycle of 20 days and a payment cycle of 15 days.What are Stewart's current business operating cycle and cashconversion cycle?If Steward and Company wants to reduce its cash conversion cycleto 35 days, what action can it take?

Step 1: Define Operating CycleAn operating cycle is the sum of the inventory holding period and the…

Answered: Stewart and Company currently has a…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter17: The Management Of Cash And Marketable Securities

Section: Chapter Questions

Problem 2P

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Question 1
Suppose that LilyMac Photography has annual sales of $233,000, cost of goods sold of $168,000, average inventories of $4,800, average accounts receivable of $25,600, and an average accounts payable balance of $7,300.Assuming that all of LilyMac’s sales are on credit, what will be the firm’s cash cycle? (Use 365 days a year. Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Suppose that LilyMac Photography has annual sales of $233,000, cost of goods sold of $168,000, average inventories of $4,800, average accounts receivable of $25,600, and an average accounts payable balance of $7,300. Assuming that all of LilyMac's sales are on credit, what will be the firm's cash cycle? (Use 365 days a year. Do not round intermediate calculations. Round your final answer to 2 decimal places.) What will be the firm's operating cycle? (Use 365 days a year. Do not round intermediate calculations. Round your final answer to 2 decimal places.)
For the Bayer Company, the average age of accounts receivable is 60 days, the average age of accounts payable is 45 days, and the average age of inventory is 72 days. Assuming a 365-day year, what is the length of of the firm's cash conversion cycle?
A firm has an average age of inventory of 100 days, an average collection period of 40 days, and an average payment period of 30 days. The firm's cash conversion cycle is?
High Inc. has annual sales of P40,000,000 and keeps average inventory of P10,000,000. On average, the firm has accounts receivable of P8,000,000. The firm buys all raw materials on credit, its trade credit terms are net 30 days, and it pays on time. The firm’s managers are searching for ways to shorten the cash conversion cycle. If sales can be maintained at existing levels but inventory can be lowered by P2,000,000 and accounts receivable lowered by P1,000,000, what will be the net change in the cash conversion cycle (in days)? Use a 360-day year. No rounding-off throughout the process.
XYZ Stadium Inc. has annual sales of P80,000,000 and keeps average inventory of P20,000,000. On average, the firm has accounts receivable of P16 ,000,000. The firm buys all raw materials on credit, its trade credit terms are net 35 days, and it pays on time. The firm’s managers are searching for ways to shorten the cash conversion cycle. If sales can be maintained at existing levels but inventory can be lowered by P4,000,000 and accounts receivable lowered by P2,000,000, what will be the net change in the cash conversion cycle? Use a 365-day year. Round to the closest whole day. A firm has an average age of inventory of 60 days, an average collection period of 45 days, and an average payment period of 30 days. The firm’s cash conversion cycle is A firm has a cash conversion cycle of 120 days, an average collection period of 25 days, and an average payment period of 50 days. The firm’s average age of inventory is A firm purchased raw materials on account and paid for them within…
Last month, Bluesky announced that it would stretch out its bill payments from 30days to 45days. The reason given was that the company wanted to “control costs and optimize cash flow”. The increased payables will be in effect for all of the company’s 4,000 suppliers. a). Why don’t all firms simply increase their payables period to shorten their cash cycles? b). Bluesky lengthened its payables period to “control costs and optimize cash flow”. Exactly what is the cash benefit to Bluesky from this change?
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You have recently been hired to improve the performance of Multiplex Corporation, which has been experiencing a severe cash shortage. As one part of your analysis, you want to determine the firm's cash conversion cycle. Using the following Information and a 365-day year, your estimate of the firm's current cash conversion cycle would be __________days Current Inventory = P120,000. Accounts receivable = P157,808. Accounts payable = P25,000. Annual sales P600,000. Total annual purchases = P365,000. Purchases credit terms: net 30 days. Receivables credit terms: net 50 days. O 100 O 49 O 144 O 168
JB Hunt Corp. has annual sales of $80,000,000; its average inventory is $20,000,000; and its average accounts receivable is $16,000,000. The firm buys all raw materials on terms of net 35 days with cost of the good sold $180,000 per day. The firm is searching for ways to shorten the cash conversion cycle. If sales and cost of the good sold can be maintained at existing levels while lowering inventory conversion cycle by 20 days, lowering average collection period by 22 days and postponing its payable to 40 days, calculate the Exodus increase in its free cash flow after the change in its cash conversion cycle.(Please show work)

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