a)
To determine: The length of cash conversion cycle of company B.
a)
Explanation of Solution
Calculation of inventory conversion period:
Therefore, inventory conversion period is 67.4 days.
Calculation of receivables conversion period:
Therefore, receivables conversion period is 30.4 days.
Calculation of length of operating cycle:
Therefore, operating cycle is 97.8 days
Calculation of payables deferral period:
Therefore, payables deferral period is 51.1 days.
Calculation of length of cash conversion cycle:
Therefore, cash conversion cycle is 46.7 days
b)
To determine: Length of the cash conversion cycle.
b)
Explanation of Solution
Calculation of receivables conversion period:
Therefore, receivables conversion period is 40.6 days.
Calculation of length of operating cycle:
Therefore, operating cycle is 108 days
Calculation of length of cash conversion cycle:
Therefore, cash conversion cycle is 56.9 days
c)
To determine: Length of the cash conversion cycle.
c)
Explanation of Solution
Calculation of receivables conversion period:
Therefore, receivables conversion period is 60.9 days.
Calculation of length of operating cycle:
Therefore, operating cycle is 128.3 days
Calculation of length of cash conversion cycle:
Therefore, cash conversion cycle is 77.2 days
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Chapter 16 Solutions
EBK CONTEMPORARY FINANCIAL MANAGEMENT
- Juroe Company provided the following income statement for last year: Juroes balance sheet as of December 31 last year showed total liabilities of 10,250,000, total equity of 6,150,000, and total assets of 16,400,000. Required: 1. Calculate the return on sales. (Note: Round the percent to two decimal places.) 2. CONCEPTUAL CONNECTION Briefly explain the meaning of the return on sales ratio, and comment on whether Juroes return on sales ratio appears appropriate.arrow_forwardAccounting calculate a. b. c.arrow_forwardces Given the following information, complete the balance sheet shown next. Collection period Days' sales in cash Current ratio Inventory turnover Liabilities to assets Payables period Assets Current assets: Cash Accounts receivable Inventory Total current assets Net fixed assets Total assets (All sales are on credit. All calculations assume a 365-day year. The payables period is based on cost of goods sold.) Note: Round your answers to the nearest whole dollar. Liabilities and shareholders' equity Current liabilities: 71 days 33 days 2.2 times Accounts payable Short-term debt Total current liabilities Long-term debt Shareholders' equity Total liabilities and equity 5 65% 35 days $ $ 1,300,000 2,000,000 7,000,000arrow_forward
- BALANCE SHEET ANALYSIS Complete the balance sheet and sales information using the following financial data:Total assets turnover: 15×Days sales outstanding: 36.5 daysaInventory turnover ratio: 5×Fixed assets turnover: 3.0×Current ratio: 2.0×Gross profit margin on sales: (Sales − Cost of goods sold)/Sales = 25%aCalculation is based on a 365-day yeararrow_forwardSuppose the 2022 financial statements of 3M Company report net sales of $23.1 billion. Accounts receivable (net) are $3.2 billion at the beginning of the year and $3.25 billion at the end of the year. Compute 3M’s accounts receivable turnover. - Accounts Recievable turnover ratio=? (times) Compute 3M’s average collection period for accounts receivable in days - Average collection period =? (days)arrow_forward.arrow_forward
- calculate the efficiency ratios, liquidity ratios, leverage ratios, and profitability ratios for KPC Corporation for this year. Where data is available, also calculate ratios for last year. Use a 360-day year. All sales are on credit to business customers. Assume an income tax rate of 30 percent.arrow_forwardThe following financial information relates to XYZ Company: Inventory turnover: 5 times Accounts receivable turnover = 6 times Accounts payable turnover = 4 times XYZ gives its customers a credit period of 60 days. XYZ’s suppliers offer a credit period of 90 days. For simplicity, we assume that the year consists of 360 days. a) Calculate the operating and cash cycle for XYZ Company b) Evaluate the implications of the cash cycle for XYZ’s working capital managementarrow_forwardWhat is the length of the firm's cash conversion cycle for this accounting question?arrow_forward
- Complete the balance sheet and sales information using the following financial data: Total assets turnover: 1.1x Days sales outstanding: 73.0 daysa Inventory turnover ratio: 4x Fixed assets turnover: 3.0x Current ratio: 2.5x Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 20% aCalculation is based on a 365-day year. Do not round intermediate calculations. Round your answers to the nearest dollar. Cash Accounts receivable Inventories Fixed assets Total assets Sales $ $ Balance Sheet $270,000 Current liabilities Long-term debt Common stock Retained earnings Total liabilities and equity Cost of goods sold $ $ $ 54,000 67,500arrow_forwardUsing the AFN formula approach, calculate the total assets of Harmon Photo Company given the following information: Sales this year = $3,000; increase in sales projected for next year = 20%; net income this year = $250; dividend payout ratio = 40%; projected excess funds available next year = $100; accounts payable = $600; notes payable = $100; and accrued wages and taxes = $200. Except for the accounts noted, there were no other current liabilities. Assume that the firm’s profit margin remains constant and that the firm is operating at full capacity. $3,000 $2,200 $2,000 $1,200 $1,000arrow_forwardComplete the balance sheet and sales information using the following financial data: Total assets turnover: 1.1x Days sales outstanding: 73.0 days* Inventory turnover ratio: 4x Fixed assets turnover: 3.0x Current ratio: 2.0x Gross profit margin on sales: (Sales Cost of goods sold)/Sales = 20% Calculation is based on a 365-day year. Do not round intermediate calculations. Round your answers to the nearest dollar. Cash Accounts receivable Inventories Fixed assets Total assets Sales Balance Sheet. $360,000 Current liabilities Long-term debt Common stock Retained earnings Total liabilities and equity Cost of goods sold $ $ 90,000 90,000arrow_forward
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