Fundamentals of Financial Management
15th Edition
ISBN: 9780357307724
Author: Brigham
Publisher: CENGAGE L
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Chapter 16, Problem 4P
a.
Summary Introduction
To determine: The length of the cash conversion cycle.
Introduction:
Cash Conversion Cycle:
The cash conversion cycle refers to the time period which starts from the production of the products to selling of the products and until the time the customer receives the cash is known as the cash conversion cycle.
b.
Summary Introduction
To determine: The investment in accounts receivable.
c.
Summary Introduction
To determine: The inventory turnover ratio.
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Zane Corporation has an inventory conversion period of 90 days, an average collection period of 34 days, and a payables deferral period of 48 days. Assume 365 days in year for your calculations.
a. What is the length of the cash conversion cycle? Round your answer to two decimal places.
days
b. If Zane's annual sales are $3,454,540 and all sales are on credit, what is the investment in accounts receivable? Do not round intermediate calculations. Round your answer to the nearest cent.
$
c. How many times per year does Zane turn over its inventory? Assume that the cost of goods sold is 75% of sales. Use sales in the numerator to calculate the turnover ratio. Do not round intermediate calculations. Round your answer to two decimal places.
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Chapter 16 Solutions
Fundamentals of Financial Management
Ch. 16 - What are some pros and cons of holding high levels...Ch. 16 - Prob. 2QCh. 16 - What are the two definitions of cash, and why do...Ch. 16 - Prob. 4QCh. 16 - What are the four key factors in a firm's credit...Ch. 16 - Prob. 6QCh. 16 - Why is some trade credit called free while other...Ch. 16 - Define each of the following loan terms, and...Ch. 16 - Why are accruals called spontaneous sources of...Ch. 16 - Indicate using a (+), (), or (0) whether each of...
Ch. 16 - CASH CONVERSION CYCLE Parramore Corp has 12...Ch. 16 - RECEIVABLES INVESTMENT Leyton Lumber Company has...Ch. 16 - COST OF TRADE CREDIT AND BANK LOAN Lancaster...Ch. 16 - Prob. 4PCh. 16 - RECEIVABLES INVESTMENT McEwan Industries sells on...Ch. 16 - WORKING CAPITAL INVESTMENT Pasha Corporation...Ch. 16 - Prob. 7PCh. 16 - CURRENT ASSETS INVESTMENT POLICY Rentz Corporation...Ch. 16 - Prob. 9P
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