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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Subject:- accounting
![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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd4704128-405f-4318-b903-2637470bce9a%2Fd8a6ed1b-7f50-4b20-84c7-81ad00f29717%2Fi5la8q_processed.png&w=3840&q=75)
Transcribed Image Text: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.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education