The Hopewell Pharmaceutical Company's balance sheet and income statement for last year are as follows: Balance Sheet (in Millions of Dollars) Assets Cash and marketable securities Accounts receivable* Inventories** Other current assets Total current assets Plant and equipment (net) Other assets Total assets $1,200 1,300 600 100 $3,200 2,500 500 $6,200 Net sales Cost of sales Liabilities and Equity Accounts payable*** Accrued liabilities (salaries and benefits) Other current liabilities "Assume that average accounts receivable are the same as ending accounts receivable. **Assume that average inventory over the year was the same as ending inventory. ***Assume that average accounts payable are the same as ending accounts payable. Selling, general, and administrative expenses Other expenses Total expenses Earnings before taxes Taxes Earnings after taxes (net income) Total current liabilities Long-term debt and other liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and equity Income Statement (in Millions of Dollars) $6,500 1,700 2,100 900 $4,700 1,800 720 $1,080 $700 200 600 $1,500 1,600 1,400 1,700 $3,100 $6,200 a. Determine Hopewell's cash conversion cycle. Assume that there are 365 days per year. Do not round intermediate calculations. Round your answer to one decimal place. days b. Give an interpretation of the value computed in part a. The number of the cash conversion cycle denotes to what extent the time interval of the collection of cash receipts from product sales -Select- ✓the time interval of the cash payments for the various resources used by the firm.
The Hopewell Pharmaceutical Company's balance sheet and income statement for last year are as follows: Balance Sheet (in Millions of Dollars) Assets Cash and marketable securities Accounts receivable* Inventories** Other current assets Total current assets Plant and equipment (net) Other assets Total assets $1,200 1,300 600 100 $3,200 2,500 500 $6,200 Net sales Cost of sales Liabilities and Equity Accounts payable*** Accrued liabilities (salaries and benefits) Other current liabilities "Assume that average accounts receivable are the same as ending accounts receivable. **Assume that average inventory over the year was the same as ending inventory. ***Assume that average accounts payable are the same as ending accounts payable. Selling, general, and administrative expenses Other expenses Total expenses Earnings before taxes Taxes Earnings after taxes (net income) Total current liabilities Long-term debt and other liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and equity Income Statement (in Millions of Dollars) $6,500 1,700 2,100 900 $4,700 1,800 720 $1,080 $700 200 600 $1,500 1,600 1,400 1,700 $3,100 $6,200 a. Determine Hopewell's cash conversion cycle. Assume that there are 365 days per year. Do not round intermediate calculations. Round your answer to one decimal place. days b. Give an interpretation of the value computed in part a. The number of the cash conversion cycle denotes to what extent the time interval of the collection of cash receipts from product sales -Select- ✓the time interval of the cash payments for the various resources used by the firm.
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
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Transcribed Image Text:The Hopewell Pharmaceutical Company's balance sheet and income statement for last year are as follows:
Balance Sheet (in Millions of Dollars)
Assets
Cash and marketable securities
Accounts receivable*
Inventories**
Other current assets
Total current assets
Plant and equipment (net)
Other assets
Total assets
$1,200
1,300
600
100
$3,200
2,500
500
$6,200
Liabilities and Equity
Accounts payable***
Accrued liabilities
(salaries and benefits)
Other current liabilities
Total current liabilities
Long-term debt and other
liabilities
Common stock
Retained earnings
Total stockholders' equity
Total liabilities and equity
*Assume that average accounts receivable are the same as ending accounts receivable.
**Assume that average inventory over the year was the same as ending inventory.
***Assume that average accounts payable are the same as ending accounts payable.
Net sales
Cost of sales
Selling, general, and administrative expenses
Other expenses
Total expenses
Earnings before taxes
Taxes
Earnings after taxes (net income)
Income Statement (in Millions of Dollars)
$6,500
1,700
2,100
900
$4,700
1,800
720
$1,080
$700
200
600
$1,500
1,600
1,400
1,700
$3,100
$6,200
a. Determine Hopewell's cash conversion cycle. Assume that there are 365 days per year. Do not round intermediate calculations. Round your answer to one decimal place.
days
b. Give an interpretation of the value computed in part a.
The number of the cash conversion cycle denotes to what extent the time interval of the collection of cash receipts from product sales -Select-
✓the time interval of the cash payments for the various resources used by the firm.
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