You have recently been hired to improve the performance of Multiplex Corporation, which has been experiencing a severe cash shortage. As one part of your analysis, you want to determine the firm’s cash conversion cycle. Using the following information and a 365-day year, (a) what is your estimate of the firm’s current cash conversion cycle?
You have recently been hired to improve the performance of Multiplex Corporation, which has been experiencing a severe cash shortage. As one part of your analysis, you want to determine the firm’s cash conversion cycle. Using the following information and a 365-day year, (a) what is your estimate of the firm’s current cash conversion cycle?
Chapter16: Supply Chains And Working Capital Management
Section: Chapter Questions
Problem 11P
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You have recently been hired to improve the performance of Multiplex Corporation, which has been experiencing a severe cash shortage. As one part of your analysis, you want to determine the firm’s cash conversion cycle. Using the following information and a 365-day year,
(a) what is your estimate of the firm’s current cash conversion cycle?
• Current inventory =
$ 180,000.00
• Annual sales =
$ 700,000.00
• Accounts receivable =
$ 165,000.00
• Accounts payable =
$ 85,000.00
• Total annual purchases =
$ 567,000.00
• Purchases credit terms: net 30 days.
• Receivables credit terms: net 50 days.
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