Business, 24.12.2021 02:50 Reese1394

Garrett Industries turns over its inventory 6 times each year; it has an average collection period of 43 days and an average payment period of 31 days. The firm's annual sales are $2.6 million. Assume there is no difference in the investment per dollar of sales in inventory, receivables, and payables; and a 365-day year.

a. Calculate the firm's cash conversion cycle, its daily cash operating expenditure, and the amount of resources needed to support its cash conversion cycle.
b. Find the firm's cash conversion cycle and resource investment requirement if it makes the following changes simultaneously.
1. Shortens the average age of inventory by 4 days.
2. Speeds the collection of accounts receivable by an average of 9 days.
3. Extends the average payment period by 9 days.

c. If the firm pays 14% for its resource investment, by how much, if anything, could it increase its annual profit as a result of the changes in part (b)?
d. If the annual cost of achieving the profit in part (c) is $35,000, what action would you recommend to the firm? Why?

Answers: 3

Show answers

Other questions on the subject: Business

Business, 22.06.2019 07:40, genyjoannerubiera

Xyz corporation has provided the following data concerning manufacturing overhead for july: actual manufacturing overhead incurred $ 69,000 manufacturing overhead applied to work in process $ 79,000 the company's cost of goods sold was $243,000 prior to closing out its manufacturing overhead account. the company closes out its manufacturing overhead account to cost of goods sold. which of the following statements is true? multiple choice manufacturing overhead was overapplied by $10,000; cost of goods sold after closing out the manufacturing overhead account is $253,000 manufacturing overhead was underapplied by $10,000; cost of goods sold after closing out the manufacturing overhead account is $233,000 manufacturing overhead was underapplied by $10,000; cost of goods sold after closing out the manufacturing overhead account is $253,000 manufacturing overhead was overapplied by $10,000; cost of goods sold after closing out the manufacturing overhead account is $233,000

Answers: 1

continue

Business, 22.06.2019 11:50, vdirectioner7634

The basic difference between macroeconomics and microeconomics is that: a. microeconomics looks at the forest (aggregate markets) while macroeconomics looks at the trees (individual markets). b. macroeconomics is concerned with groups of individuals while microeconomics is concerned with single countries. c. microeconomics is concerned with the trees (individual markets) while macroeconomics is concerned with the forest (aggregate markets). d. macroeconomics is concerned with generalization while microeconomics is concerned with specialization.

Answers: 3

continue

Business, 22.06.2019 18:00, claftonaustin846

Your subscription to investing wisely weekly is about to expire. you plan to subscribe to the magazine for the rest of your life, and you can renew it by paying $85 annually, beginning immediately, or you can get a lifetime subscription for $620, also payable immediately. assuming that you can earn 6.0% on your funds and that the annual renewal rate will remain constant, how many years must you live to make the lifetime subscription the better buy?

Answers: 2

continue

Business, 22.06.2019 20:20, lllmmmaaaooo

Trade will take place: a. if the maximum that a consumer is willing and able to pay is less than the minimum price the producer is willing and able to accept for a good. b. if the maximum that a consumer is willing and able to pay is greater than the minimum price the producer is willing and able to accept for a good. c. only if the maximum that a consumer is willing and able to pay is equal to the minimum price the producer is willing and able to accept for a good. d. none of the above.

Answers: 3

continue

You know the right answer?

Garrett Industries turns over its inventory 6 times each year; it has an average collection period o...