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Tomas Fishing Products 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 receivables in 15 days. The firm has a current annual outlay of $1,960,000 on operating cycle investments. Tomas currently pays 10 percent for its negotiated financing. (Assume a 360 day year.) Required: 1. Calculate the firm's cash conversion cycle. 2. Calculate the firm's operating cycle.

Tomas Fishing Products 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 receivables in 15 days. The firm has a current annual outlay of $1,960,000 on operating cycle investments. Tomas currently pays 10 percent for its negotiated financing. (Assume a 360 day year.) Required: 1. Calculate the firm's cash conversion cycle. 2. Calculate the firm's operating cycle.

Essentials Of Investments
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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CASE 2 Tomas Fishing Products 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 receivables in 15 days. The firm has a current annual outlay of $1,960,000 on operating cycle investments. Tomas currently pays 10 percent for its negotiated financing. (Assume a 360 day year.) Required: 1. Calculate the firm's cash conversion cycle. 2. Calculate the firm's operating cycle.
Transcribed Image Text:CASE 2 Tomas Fishing Products 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 receivables in 15 days. The firm has a current annual outlay of $1,960,000 on operating cycle investments. Tomas currently pays 10 percent for its negotiated financing. (Assume a 360 day year.) Required: 1. Calculate the firm's cash conversion cycle. 2. Calculate the firm's operating cycle.
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