Question 3ABC Company Ltd. has annual revenues of $750 million and annual cost of goodssold of $450 million. Annual cash flows from operations are $51 million, while dailycredit sales were $163,548. It published its annual report for the financial year 2021-22 ending, with the following balance sheet items as at 31 march 2022:Ending inventory: $82 millionEnding accounts receivable: $56 millionEnding accounts payable: $43 million●ABC Co. Ltd. treasurers forecast the following balance pattern for monthlycollections:●●●Month 0: 5%Month 1: 40%Month 2: 35%Month 3: 15%Month 4: 5%Required:a) Calculate the Cash Conversion Cycle (CCC) for the company and discussmeasures the company could adopt to shorten its CCC.b) What percentage of outstanding sales proceeds are yet to be collected asreceivables 3 months after the sales were invoiced?

Cash conversion cycle = Days Inventory Outstanding + Days Sales Outstanding – Days Payables…

Answered: Required: a) Calculate the Cash…

Required: a) Calculate the Cash Conversion Cycle (CCC) for the company and discuss measures the company could adopt to shorten its CCC.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 14BEA: Last year, Nikkola Company had net sales of 2.299.500,000 and cost of goods sold of 1,755,000,000....

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ABC Company Ltd. has annual revenues of $750 million and annual cost of goods sold of $450 million. Annual cash flows from operations are $51 minion, while daly credit sales were $163,548. It published its annual report for the financial year 2021-22 ending, with the following balance sheet items as at 31 march 2022: Ending inventory: $82 million Ending accounts receivable: $56 million Ending accounts payable: $43 million ABC Co. Lid, treasurers forecast the following balance pattern for monthly collections: Month 0: 5% Month 1: 40% Month 2 35% Month 3: 15% Month 4: 5% Required: a) Calculate the Cash Conversion Cycle (CCC) for the company and discuss measures the company could adopt to shorten its CCC. b) What percentage of outstanding sales proceeds are yet to be collected as receivables 3 months after the sales were invoiced?
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