Tan Fishing Products Ltd is analyzing the performance of its cash management. On the average, the firm holds inventory 65 days, pays its suppliers in 35 days, and collects its accounts receivable in 15 days. Tan Fishing Products Ltd also sells to overseas customers. The firm has a current annual outlay of $1,980,000 on operating cycle investments. Tan currently pays 10 percent for its negotiated financing. (Assume a 360-day year.) a) b) Calculate the firm's operating cycle and the firm's cash conversion cycle. Calculate the daily expenditure and the firm's annual savings if the operating cycle is reduced by 15 days.

Tan Fishing Products Ltd is analyzing the performance of its cash management. On the average, the firm holds inventory 65 days, pays its suppliers in 35 days, and collects its accounts receivable in 15 days. Tan Fishing Products Ltd also sells to overseas customers. The firm has a current annual outlay of $1,980,000 on operating cycle investments. Tan currently pays 10 percent for its negotiated financing. (Assume a 360-day year.) a) b) Calculate the firm's operating cycle and the firm's cash conversion cycle. Calculate the daily expenditure and the firm's annual savings if the operating cycle is reduced by 15 days.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter4: Financial Planning And Forecasting

Section: Chapter Questions

Problem 9P

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