Calculate the average collection period, average payment period, inventory turnover period and cash conversion cycle for the following firm (1Year = 360 Days): Income statement data: Sales 10000, COGS 9000 Balance sheet data: Inventory 1100, Accounts receivable 400, Accounts payable 600 What effect will all the following activities have on the cash conversion cycle? • the company reduces the leve of inventory by 10%, the company changes the terms of sale and 60% of customers pay after 5 days while the remaining pay after 30 days (with sales on the same level) and the company has extended its own payment conditions by one week.
Calculate the average collection period, average payment period, inventory turnover period and cash conversion cycle for the following firm (1Year = 360 Days): Income statement data: Sales 10000, COGS 9000 Balance sheet data: Inventory 1100, Accounts receivable 400, Accounts payable 600 What effect will all the following activities have on the cash conversion cycle? • the company reduces the leve of inventory by 10%, the company changes the terms of sale and 60% of customers pay after 5 days while the remaining pay after 30 days (with sales on the same level) and the company has extended its own payment conditions by one week.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter21: Supply Chains And Working Capital Management
Section: Chapter Questions
Problem 11P: Negus Enterprises has an inventory conversion period of 50 days, an average collection period of 35...
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