Toronto Donuts Bakery collects 50% of its monthly sales immediately and the rest a month later. Its production costs are 70% of sales. It holds 1 month of sales in inventory, and it pays all of its bills immediately. Calculate the cash conversion cycle. 30 Days O 45 Days This company does not have Cash Cycle. 60 Days 15 Days
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- A Mikey's sells $119,500 of its accounts receivable to factors at a 1% discount. The firm’s average collection period is one month. What is the dollar cost of the factoring service? Dollar-cost of the factoring service $_________ per monthBulldogs Inc. has a normal operating cycle of 32 days and cash conversion cycle of 25 days. Which of the following must be true if the company wants to shorten its cash conversion cycle to 20 days? A. Decrease the operating profit by 2% B. Increase the age of inventory by 5 day C. Decrease the days sales outstanding by 5 days D. Increase the accounts payable deferral period by 2 daysA CARDBOARD BOX FACTORY pays its suppliers 40 days after making the purchase and receiving the goods. The average collection period is 45 days, i.e. its customers settle their debt with the company in that time; and the average inventory age is based on the inventory turnover which is 10 times a year. The company spends about $1.23 million in operating cycle investments. With this data we need to calculate: The operating cycle.The cash conversion cycle.The cash turnover.The minimum cash balance.You plan to make modifications to your policies so that you can decrease your PPC by 10 days, and decrease your EPI by 2 times (before converting it to days). Negotiations with your supplier have been unsuccessful and the payment term has been reduced by 10 days. With these data you have to calculate: Re-calculate the Operating Cycle, the SCC, RC and SMC introducing the proposed changes.Calculate the opportunity cost that the changes will cause, if the company's interest rate is 8%.
- Bulldogs Inc. has a normal operating cycle of 32 days and cash conversion cycle of 25 days. Which of the following must be true if the company wants to shorten its cash conversion cycle to 20 days? Decrease the operating profit by 2% Increase the age of inventory by 5 day Increase the accounts payable deferral period by 2 days Decrease the days sales outstanding by 5 daysUmbridge Purses Unlimited sells purses with a sales price of $25.00 each. Each purse costs the company $20.00 to produce, and the store incurs a total of $210,000 in fixed costs each year. What is the yearly breakeven point in units? Select one: O O C a. 10,500 purses b. 21,000 purses c. 8,400 purses d. 42,000 purses e. None of these options are correct.Rainbow Inc.'s sales equal $200,000 each month. Rainbow generally permits credit purchases with terms of 3/10 net 30. Ten (10) percent of total sales are for cash, and the remaining 90 percent pay on credit. Of the credit sales, 20 percent are paid on Day 10 of the billing cycle, and the rest pay on Day 30 (in the following month). What is the amount of the discounts that Rainbow's customers normally take?
- GB Inc. sells 12,000 gallons of ice cream each month from its central storage facility. Monthly carrying costs are P0.10 per gallon and ordering costs are P50 per order. Ignore potential stockout costs and assume a 30-day month. What is the total inventory cost for the month? P346 per month P500 per month P1,000 per month P650 per monthAce Corp. has sales for the second quarter of $2M, $3M, and $5m per month. All sales are on credit terms 2/10 net 40. Only a small proportion of customers (10%) pay early enough to earn the 2% discount. Most customers (70%) pay in the month following purchase, with the remaining 20% paying in the second month following purchase. It obtains 30 days credit from its suppliers, and purchases usually amount to 70 % of the current month's sales. Taxes ($0.75M) must be paid in the third month of the quarter. Other expenses are (i) wages @ 15% of the current month's sales (ii) interest on the debt ($0.5M), and “other expenses” @ 10% of the current month's sales. Construct a cash budget for the third month of the second quarter. Does the firm have a cash surplus or deficit?Tokyo Corporation purchases P1,500 in raw material each month to support sales of P2,500 that occur in the following month. In addition, Tokyo Corporation pays wages, rent, and taxes that total P700 each month. What is Tokyo's total monthly cash disbursements? a. P300 b. P4,700 c. P700 d. P2,200 e. P1,000
- ABC sells on credit terms of 2/10, n/30. Daily sales average 200 units at P2,500 each throughout the 365-day year. All salesare on credit. On average, 40% take the cash discount by paying on tenth day while the remaining 60% pay on the 30 th day.It is planning to change the credit terms to 2/10, n/25. If this change was done, daily sales will be 180 units. Around 45% willpay on the tenth day while the remaining 55% will pay on the 25th day. 1. What will be the new average accounts receivable balance based on the given?2. What will be the new average collection period of the receivables in days?3. What will be the new receivable turnover? Round off to two decimal places.Bulldogs Inc. sells on term 3/20, net 40. Total sale for the year are P1,200,000 on which 40% is cash sales. 30% pays on the 20th day and take discounts while the remaining customers always pay on time. What is the average amount of accounts receivable? (Use 360-day year) The annual demand of Bulldogs Inc. sole product totaled 450,000 units. Due to uncertainty in supply of items, the maximum possible lead time for the orders is 2 weeks and 1 day. A safety stock of 6,250 units is determined. What is the normal lead time? (Use 360 days)ABC sells on credit terms of 2/10, n/30. Daily sales average 200 units at P2,500 each throughout the 365-day year. All sales are on credit. On average, 40% take the cash discount by paying on tenth day while the remaining 60% pay on the 30 day. It is planning to change the credit terms to 2/10, n/25. If this change was done, daily sales will be 180 units. Around 45% will pay on the tenth day while the remaining 55% will pay on the 25 day. 1. What is the original average accounts receivable balance based on the given? 2. What is the original average collection period of the receivables in days? 3. What is the original receivable turnover? Round off to two decimal places. 4. What will be the new average accounts receivable balance based on the given? 5. What will be the new average collection period of the receivables in days? 6. What will be the new receivable turnover? Round off to two decimal places.