The owner of Ardent company wants to increase sales by ZMW75 000 over the next year. The company's gross profit margin is 30 percent of sales, so its gross profit on these additional sales would be ZMW X 30%=ZMW 22 500, its average collection period is 47 days, and managers estimate that generating the additional sales will require an increase in expenses of ZMW 21 300 a) What the additional cash that Ardent will need to support this higher level of sales? b) What steps can the owner use to reduce the cash cycle? c) What is the implication on your business if you run out of cash?

The owner of Ardent company wants to increase sales by ZMW75 000 over the next year. The company's gross profit margin is 30 percent of sales, so its gross profit on these additional sales would be ZMW X 30%=ZMW 22 500, its average collection period is 47 days, and managers estimate that generating the additional sales will require an increase in expenses of ZMW 21 300 a) What the additional cash that Ardent will need to support this higher level of sales? b) What steps can the owner use to reduce the cash cycle? c) What is the implication on your business if you run out of cash?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 1PA: Your company is planning to purchase a new log splitter for is lawn and garden business. The new...

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