The owner of Ardent company wants to increase sales by ZMW75 000 over the next year. The company's gross profit margin is 30 percent of sales, so its gross profit on these additional sales would be ZMW X 30%=ZMW 22 500, its average collection period is 47 days, and managers estimate that generating the additional sales will require an increase in expenses of ZMW 21 300 a) What the additional cash that Ardent will need to support this higher level of sales? b) What steps can the owner use to reduce the cash cycle? c) What is the implication on your business if you run out of cash?
The owner of Ardent company wants to increase sales by ZMW75 000 over the next year. The company's gross profit margin is 30 percent of sales, so its gross profit on these additional sales would be ZMW X 30%=ZMW 22 500, its average collection period is 47 days, and managers estimate that generating the additional sales will require an increase in expenses of ZMW 21 300 a) What the additional cash that Ardent will need to support this higher level of sales? b) What steps can the owner use to reduce the cash cycle? c) What is the implication on your business if you run out of cash?
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
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The owner of Ardent company wants to increase sales by ZMW75 000 over the next year. The company's gross profit margin is 30 percent of sales, so its gross profit on these additional sales would be ZMW X 30%=ZMW 22 500, its average collection period is 47 days, and managers estimate that generating the additional sales will require an increase in expenses of ZMW 21 300
a) What the additional cash that Ardent will need to support this higher level of sales?
b) What steps can the owner use to reduce the cash cycle?
c) What is the implication on your business if you run out of cash?
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