Calculate cash conversion cycle

Reference no: EM1344018

Strickler technology is considering changes in its working capital policies to improve its cash flow cycle. Strickler's sales last year were $3,250,000 (all on credit), and its net profit margin was 7%. Its inventory turnover was 9.0 times during the year, and its DSO was 41 days. Its annual cost of goods sold was $1,895,000. The firm has fixed assets totaling $535,000. Strickler's payables deferral period is 45 days.

a) Calculate Strickler's cash conversion cycle.

b) Assuming Strickler holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA.

c) Suppose Strickler's managers believe the annual inventory turnover can be raised to 12 times without affecting sales. What would Strickler's cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 12 for the year?

Reference no: EM1344018

Questions Cloud

Compute present value of winnings : You have won the $1.4 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday, 78 years from now.

Do you advise him to undertake the project : He also assumes that he will keep refinancing this debt indefinitely with new debt issues. Do you advise him to undertake the project?

Dialog diagram for web-based system for airline : Describe each section of the dialogue box. Imagine, you are developing a web-based system for an airline. Sketch the dialog diagram for some sample screens that users will need to navigate through.

Valuation techniques-divestiture : Describe one motive for pursuing a M&A? Illustrate and provide an example of one commonly employed term in M&A? Define three types of M&A's?

Calculate cash conversion cycle : Strickler technology is thinking changes in its working capital policies to improve its cash flow cycle. Strickler's sales last year $3,250,000 (all on credit), & its net profit margin was 7 percent.

Compute nominal gdp in every year : Assume the subsequent data describe o/p in two different yrs. Compute nominal GDP in every yr.

Explaining law of diminishing returns : As computer word size gets larger and larger, there is a law of diminishing returns; speed of execution of application programs doesn't increase and may, in fact, decrease.

Failure of merger and acquisition : Describe the reasons why an M&A fails, such as technical and legal insolvency, and bankruptcy. Consider what happens to stakeholders, company image, price-per-share, market share, company assets, industry position, goodwill, and service capability...

Computing pv of future requirements : Starting three months from now, you want to be able to withdraw $1,700 every quarter from your bank account to cover college expenses over the next four years.

User Account

All Pages