Increase the operating cycle

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1. Identify which of the following will increase the operating cycle. Choose only one. decrease in accounts receivable turnover ratio increase in accounts payable turnover ratio increase in cash cycle decrease in inventory period decrease in accounts payable period.

2. A company sells 158,593 units per year. Fixed costs per order are $101 and carrying cost is $28 per unit per year. If management uses an EOQ model, how many orders will it place per year?

3. We have a stock which has a P/E of 12. It has 1 million outstanding shares and the equity is $2 million. Its net profit margin, financial leverage and ATO are .07, 1.3 and 1.6 respectively. Derive the price for next year. What are 4 important variables that affect P/E ratios?

(Please use Formulas)

Reference no: EM132056040

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