You have been provided with financials for a company in car manufacturing sector for the year ending 31 December as follows Property Plant and Equipment 2023 172 000 2022 162 000 Current assets: Cash Marketable securities Accounts Receivable Inventory Prepaid expenses Total assets Equity and Liabilities Current Liabilities Accounts payable Accrued expenses 1 600 900 24 000 1 400 600 22 000 40 000 34 000 500 600 67 000 58 600 240 000 221 700 140 000 125 600 15 000 14 100 4 400 4 200 Notes payable 6.000 6 400 25 400 24 700 Long term liabilities Bonds payable (Face value = P1000.00) 74 600 71 400 Total equity and liabilities 240 000 221 700 Extracts from the income statements Revenue Opening inventory Purchases Closing inventory Cost of sales 100 000 146 000 34 000 30 000 94 000 132 000 (40000) (88 000) (34 000) (128 000) 12000 18.000 Required a) Calculate the cash conversion cycle (CCC) for each of the two years. Interpret the meaning of each component of the CCC in each year and then discuss reasons for the notable changes across the two financial years. (19 marks) b) Discuss factors that can help to shorten the CCC. Your answer should give reference to any two of the main components that make up the CCC you calculated above. (6 marks)
You have been provided with financials for a company in car manufacturing sector for the year ending 31 December as follows Property Plant and Equipment 2023 172 000 2022 162 000 Current assets: Cash Marketable securities Accounts Receivable Inventory Prepaid expenses Total assets Equity and Liabilities Current Liabilities Accounts payable Accrued expenses 1 600 900 24 000 1 400 600 22 000 40 000 34 000 500 600 67 000 58 600 240 000 221 700 140 000 125 600 15 000 14 100 4 400 4 200 Notes payable 6.000 6 400 25 400 24 700 Long term liabilities Bonds payable (Face value = P1000.00) 74 600 71 400 Total equity and liabilities 240 000 221 700 Extracts from the income statements Revenue Opening inventory Purchases Closing inventory Cost of sales 100 000 146 000 34 000 30 000 94 000 132 000 (40000) (88 000) (34 000) (128 000) 12000 18.000 Required a) Calculate the cash conversion cycle (CCC) for each of the two years. Interpret the meaning of each component of the CCC in each year and then discuss reasons for the notable changes across the two financial years. (19 marks) b) Discuss factors that can help to shorten the CCC. Your answer should give reference to any two of the main components that make up the CCC you calculated above. (6 marks)
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
Problem 1PS
Related questions
Question
Transcribed Image Text:You have been provided with financials for a company in car manufacturing sector for the year
ending 31 December as follows
Property Plant and Equipment
2023
172 000
2022
162 000
Current assets:
Cash
Marketable securities
Accounts Receivable
Inventory
Prepaid expenses
Total assets
Equity and Liabilities
Current Liabilities
Accounts payable
Accrued expenses
1 600
900
24 000
1 400
600
22 000
40 000
34 000
500
600
67 000
58 600
240 000
221 700
140 000
125 600
15 000
14 100
4 400
4 200
Notes payable
6.000
6 400
25 400
24 700
Long term liabilities
Bonds payable (Face value = P1000.00)
74 600
71 400
Total equity and liabilities
240 000
221 700
Extracts from the income statements
Revenue
Opening inventory
Purchases
Closing inventory
Cost of sales
100 000
146 000
34 000
30 000
94 000
132 000
(40000)
(88 000)
(34 000)
(128 000)
12000
18.000
Transcribed Image Text:Required
a) Calculate the cash conversion cycle (CCC) for each of the two years. Interpret the meaning
of each component of the CCC in each year and then discuss reasons for the notable changes
across the two financial years.
(19 marks)
b) Discuss factors that can help to shorten the CCC. Your answer should give reference to any
two of the main components that make up the CCC you calculated above.
(6 marks)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education