Aqua Corp. is considering a change in marketing strategy which would cost $100,000 per year (pre-tax) and increase the company’s overall inventory by 4%. Sales (as well as payables and receivables) would immediately increase by 3% on a permanent basis but would require no additional fixed assets. Currently, the company has annual sales of $33.7 million (20% of which are made on net 30 credit terms) but no growth and maintains 44 days of sales in inventory. Accounts payable averaged $4.2 million over the past 12 months. a) How long is the company’s cash conversion cycle?

The following tables contain financial statements for Dynastatics Corporation. Although the company has not been growing, it now plans to expand and will increase net fixed assets (i.e., assets net of depreciation) by $200,000 per year for the next 5 years, and it forecasts that the ratio of revenues to total assets will remain at 1.50. Annual depreciation is 10% of net fixed assets at the beginning of the year. Fixed costs are expected to remain at $60 and variable costs at 80% of revenue. The company's policy is to pay out two- thirds of net income as dividends and to maintain a book debt ratio of 20% of total capital. INCOME STATEMENT, 2019 (Figures in $ thousands) Revenue $1,800 Fixed costs Variable costs (80% of revenue) Depreciation Interest (8% of beginning-of-year debt) Taxable income Taxes (at 40%) 60 1,440 80 24 196 78 Net income 118 Dividends Addition to retained earnings $ 79 $ 39 BALANCE SHEET, YEAR-END (Figures in $ thousands) 2019 Assets Net working capital Fixed assets…

The following tables contain financial statements for Dynastatics Corporation. Although the company has not been growing, it now plans to expand and will increase net fixed assets (i.e., assets net of depreciation) by $350,000 per year for the next 4 years, and it forecasts that the ratio of revenues to total assets will remain at 1.50. Annual depreciation is 20% of net fixed assets at the beginning of the year. Fixed costs are expected to remain at $86 and variable costs at 70% of revenue. The company’s policy is to pay out one-half of net income as dividends and to maintain a book debt ratio of 20% of total capital.   INCOME STATEMENT, 2019(Figures in $ thousands) Revenue       $ 2,160   Fixed costs         86   Variable costs (70% of revenue)         1,512   Depreciation         280   Interest (6% of beginning-of-year debt)         18   Taxable income         264   Taxes (at 35%)         92   Net income       $ 172   Dividends $ 86         Addition to retained…

Price Corporation is considering selling to a group of new customers and creating new annual sales of $240,000. 3% will be uncollectible. The collection cost on all accounts is 6% of new sales, the cost of producing and selling is 83% of sales, and the firm is in the 22% tax bracket. What is the profit on new sales?