Determine the effect of its inventory and receivables

Reference no: EM131063482

Carmen and Vanessa's Corporation wants to determine the effect of its inventory and receivables management on its cash flow cycle. Carmen and Vanessa's sales last year (all on credit) was $200,000, and earned a net profit % of 10%. Inventory Turnover was 12, Days Sales Outstanding was 45, and Days Payable Outstanding were 30. Cost of Goods Sold was $120,000, and Fixed Assets were $50,000. a. Please calculate Carmen and Vanessa's cash conversion cycle (preferably using my methodology, not the text's ) b. Assume Carmen and Vanessa has no cash, no marketable securities and no other Long Term Assets. What is Carmen and Vanessa's Total Asset Turnover and ROA? c. If Carmen and Vanessa improves Inventory Turnover to 15, what is the new cash conversion cycle, Total Asset Turnover and ROA?

Reference no: EM131063482

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