Need help Canadian Products is concerned about managing its operatingassets and liabilities efficiently. Inventories have an average age of110 days, and accounts receivable have an average age of 50 days.Accounts payable are paid approximately 40 days after they arise.The firm has annual sales of $36 million, its cost of goods soldrepresents 75 percent of sales, and its purchases represent 70percent of the cost of goods sold. Assume a 365-day year.a. Calculate the firm's operating cycle (OC).b. Calculate the firm's cash conversion cycle (CCC).c. Calculate the amount of total resources Canadian Products hasinvested in its CCC.d. Discuss how management might be able to reduce the amount oftotal resources invested in the CCC.

Given Information:Average inventory age: 110 daysAverage accounts receivable age: 50 daysAccounts…

Answered: Canadian Products is concerned about…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter16: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 11P

See similar textbooks

Similar questions

Need answer the question
Want to give you a correct answer
Berry Manufacturing turns over its inventory 8 times each year, has an Average Payment Period of 35 days and has an Average Collection Period of 60 days. The firm’s annual sales are $3.5 million. Assume there is no difference in the investment per dollar of sales in inventory, receivable, and payables and that there is a 365-day year. A. Calculate the Firm’s Operating Cycle. B. Calculate the Firm’s Cash Conversion Cycle. C. Calculate the Firm’s Daily Cash Operating Expenditure.
What will be the firm's operating cycle?
Need help please provide answer
Suppose that Dunn Industries has annual sales of $2.3 million, cost of goods sold of $1,650,000, average inventories of $1,116,000, and average accounts receivable of $750,000. Assume that all of Dunn’s sales are on credit.What will be the firm’s operating cycle? (Use 365 days a year. Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Libscomb Technologies' annual sales are $6,750,624 and all sales are made on credit, it purchases $3,062,806 of materials each year (and this is its cost of goods sold). Libscomb also has $571,915 of inventory, $1,475,000 of accounts receivable, and $1,400,000 of accounts payable. Assume a 365 day year. What is Libscomb’s Receivables Period (in days)?
Libscomb Technologies' annual sales are $6,974,991 and all sales are made on credit, it purchases $3,511,535 of materials each year (and this is its cost of goods sold). Libscomb also has $550,869 of inventory, $522,928 of accounts receivable, and $477,584 of accounts payable. Assume a 365 day year. What is Libscomb’s Inventory Turnover?
Owen's Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity. Assets Cash Accounts receivable Inventory Current assets Fixed assets Total assets $ 10 32 33 $ 75 New funds $118 Balance Sheet (in $ millions) Liabilities and Stockholdera Equity Accounts payable Accrued wages Accrued taxes Current liabilities Notes payable Common stock Retained earnings Total liabilities and stockholders' equity $18 7 11 $ 36 14 17 51 $118 TOUS REPOR Owen's Electronics has an aftertax profit margin of 9 percent and a dividend payout ratio of 50 percent. STA U SLU KUTEN HOTEL If sales grow by 25 percent next year, determine how many dollars of new funds are needed to finance the growth. (Do not…
Camp Manufacturing turns over its inventory eight times each year, has an average payment period of 35 days, and has an average collection period of 60 days. The firm’s annual sales are $3.5 million. Assume there is no difference in the investment per dollar of sales in inventory, receivables, and payables and that there is a 365-day year. If the firm pays 14% for these resources, by how much would it increase its annual profits by favorably changing its current cash conversion cycle by 20 days?
Suppose that LilyMac Photography has annual sales of $230,000, cost of goods sold of $165,000, average inventories of $4,500, and average accounts receivable of $25,000. Assume that all of LilyMac's sales are on credit. What will be the firm's operating cycle? (Use 365 days a year. Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Suppose that LilyMac Photography has annual sales of $233,000, cost of goods sold of $168,000, average inventories of $4,800, average accounts receivable of $25,600, and an average accounts payable balance of $7,300. Assuming that all of LilyMac's sales are on credit, what will be the firm's cash cycle? (Use 365 days a year. Do not round intermediate calculations. Round your final answer to 2 decimal places.) What will be the firm's operating cycle? (Use 365 days a year. Do not round intermediate calculations. Round your final answer to 2 decimal places.)

SEE MORE QUESTIONS

Recommended textbooks for you

Corporate Fin Focused Approach

Finance

ISBN:

9781285660516

Author:

EHRHARDT

Publisher:

Cengage

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Corporate Fin Focused Approach

Finance

ISBN:

9781285660516

Author:

EHRHARDT

Publisher:

Cengage

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

SEE MORE TEXTBOOKS