Working Capital Cash Flow Cycle Strickler Technology is considering changes in its working capital policies to improve its cash flow cycle. Strickler's sales last year were $3,455,000 (all on credit), and its net profit margin was 7%. Its inventory turnover was 5.5 times during the year, and its DSO was 30 days. Its annual cost of goods sold was $1,925,000. The firm had fixed assets totaling $587,500. Strickler's payables deferral period is 34 days. Assume a 365-day year. Do not round intermediate calculations. a. Calculate Strickler's cash conversion cycle. Do not round intermediate calculations. Round your answer to two decimal places. days b. Assuming Strickler holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. Do not round intermediate calculations. Round your answers to two decimal places. Total assets turnover: ROA: c. Suppose Strickler's managers believe the annual inventory turnover can be raised to 10 times without affecting sale or profit margins. What would Strickler's cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 10 for the year? Do not round intermediate calculations. Round your answers to two decimal places. Cash conversion cycle: days % ROA: Total assets turnover: %
Working Capital Cash Flow Cycle Strickler Technology is considering changes in its working capital policies to improve its cash flow cycle. Strickler's sales last year were $3,455,000 (all on credit), and its net profit margin was 7%. Its inventory turnover was 5.5 times during the year, and its DSO was 30 days. Its annual cost of goods sold was $1,925,000. The firm had fixed assets totaling $587,500. Strickler's payables deferral period is 34 days. Assume a 365-day year. Do not round intermediate calculations. a. Calculate Strickler's cash conversion cycle. Do not round intermediate calculations. Round your answer to two decimal places. days b. Assuming Strickler holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. Do not round intermediate calculations. Round your answers to two decimal places. Total assets turnover: ROA: c. Suppose Strickler's managers believe the annual inventory turnover can be raised to 10 times without affecting sale or profit margins. What would Strickler's cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 10 for the year? Do not round intermediate calculations. Round your answers to two decimal places. Cash conversion cycle: days % ROA: Total assets turnover: %
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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Transcribed Image Text:Working Capital Cash Flow Cycle
Strickler Technology is considering changes in its working capital policies to improve its cash flow cycle. Strickler's sales last year were $3,455,000 (all on credit), and its net profit margin was 7%. Its inventory turnover was 5.5 times during the year, and its DSO was 30
days. Its annual cost of goods sold was $1,925,000. The firm had fixed assets totaling $587,500. Strickler's payables deferral period is 34 days. Assume a 365-day year. Do not round intermediate calculations.
a. Calculate Strickler's cash conversion cycle. Do not round intermediate calculations. Round your answer to two decimal places.
days
b. Assuming Strickler holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. Do not round intermediate calculations. Round your answers to two decimal places.
Total assets turnover:
ROA:
c. Suppose Strickler's managers believe the annual inventory turnover can be raised to 10 times without affecting sale or profit margins. What would Strickler's cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 10 for the
year? Do not round intermediate calculations. Round your answers to two decimal places.
Cash conversion cycle:
%
Total assets turnover:
ROA:
%
days
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