As an operations management consultant for the Graco Manufacturing Company, you have been asked to evaluate a furniture manufacturer’s cash-to-cash conversion cycle un- der the following assumptions for its performance in 2021: sales of $5 million, cost of goods sold of $20.8 million, 50 operating weeks a year, total average on-hand inventory of $2,150,000, accounts receivable equal to $2,455,000, and accounts payable of $3,695,000. However, the average on-hand inventory does not include $4,200,000 in inventory al- allowance for excess, cancelled orders, and obsolete inventories. Based on this description and data, please answer the following questions:What is the “total” cash-to-cash conversion cycle for Graco Manufacturing Company for the 2021 year ignoring the $4,200,000 in inventory allowances for excess, cancelled orders, and obsolete inventories? Please show all the calculations necessary to justify your answer.What would be impact of including the $4,200,00 in inventory allowances for excess, cancelled orders, and obsolete inventories on the “total” cash-to-cash conversion cycle for J&L Packaging, Inc. for last year? Please show all the calculations necessary to justify your answer.Under what circumstances is it OK to ignore the $4,200,00 in inventory allowances for excess, cancelled orders, and obsolete inventories?What recommendations can you make to Graco Manufacturing Company to improve their performance?

InventoryInventory is the material available to the company for the process of production and sale.…

Answered: What is the “total” cash-to-cash…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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As an operations management consultant for the Graco Manufacturing Company, you have been asked to evaluate a furniture manufacturer’s cash-to-cash conversion cycle un- der the following assumptions for its performance in 2021: sales of $5 million, cost of goods sold of $20.8 million, 50 operating weeks a year, total average on-hand inventory of $2,150,000, accounts receivable equal to $2,455,000, and accounts payable of $3,695,000. However, the average on-hand inventory does not include $4,200,000 in inventory al- allowance for excess, cancelled orders, and obsolete inventories. Based on this description and data, please answer the following questions:

What is the “total” cash-to-cash conversion cycle for Graco Manufacturing Company for the 2021 year ignoring the $4,200,000 in inventory allowances for excess, cancelled orders, and obsolete inventories? Please show all the calculations necessary to justify your answer.
What would be impact of including the $4,200,00 in inventory allowances for excess, cancelled orders, and obsolete inventories on the “total” cash-to-cash conversion cycle for J&L Packaging, Inc. for last year? Please show all the calculations necessary to justify your answer.
Under what circumstances is it OK to ignore the $4,200,00 in inventory allowances for excess, cancelled orders, and obsolete inventories?
What recommendations can you make to Graco Manufacturing Company to improve their performance?

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