Intermediate Financial Management
14th Edition
ISBN: 9780357516782
Author: Brigham, Eugene F., Daves, Phillip R.
Publisher: Cengage Learning
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Chapter 21, Problem 12P
Strickler Technology is considering changes in its working capital policies to improve its cash flow cycle. Strickler’s sales last year were $3,250,000 (all on credit), and its net profit margin was 7%. Its inventory turnover was 6.0 times during the year, and its DSO was 41 days. Its annual cost of goods sold was $1,800,000. The firm had fixed assets totaling $535,000. Strickler’s payables deferral period is 45 days.
- a. Calculate Strickler’s cash conversion cycle.
- b. Assuming Strickler holds negligible amounts of cash and marketable securities, calculate its total assets turnover and
ROA . - c. Suppose Strickler’s managers believe the annual inventory turnover can be raised to 9 times without affecting sale or profit margins. What would Strickler’s cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 9 for the year?
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Strickler Technology is considering changes in its working capital policies to improve its cash flow cycle. Strickler’s sales last year were $3,250,000 (all on credit), and its net profit margin was 7%. Its inventory turnover was 6.0 times during the year, and its DSO was 41 days. Its annual cost of goods sold was $1,800,000. The firm had fixed assets totaling $535,000. Strickler’s payables deferral period is 45 days.
Calculate Strickler’s cash conversion cycle.
Assuming Strickler holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA.
Suppose Strickler’s managers believe the annual inventory turnover can be raised to 9 times without affecting sale or profit margins. What would Strickler’s cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 9 for the year?
Strickler Technology is considering changes in its working capital policies to
improve its cash flow cycle. Strickler's sales last year were $3,250,000 (all on credit),
and its net profit margin was 7%. Its inventory turnover was 6.0 times during the
year, and its DSO was 41 days. Its annual cost of goods sold was $1,800,000.
The firm had fixed assets totaling $535,000. Strickler's payables deferral period is
45 days.
(16-12)
Working Capital
Cash Flow Cycle
a. Calculate Strickler's cash conversion cycle.
b. Assuming Strickler holds negligible amounts of cash and marketable securities,
calculate its total assets turnover and ROA.
C. Suppose Strickler's managers believe the annual inventory turnover can be raised
to 9 times without affecting sale or profit margins. What would Strickler's cash
conversion cycle, total assets turnover, and ROA have been if the inventory turnove
had been 9 for the year?
Strickler Technology is considering changes in its working capital policies to improve its
cash flow cycle. Strickler’s sales last year were $3,250,000 (all on credit), and its net profit
margin was 7%. Its inventory turnover was 6.0 times during the year, and its DSO was
41 days. Its annual cost of goods sold was $1,800,000. The firm had fixed assets totaling
$535,000. Strickler’s payables deferral period is 45 days.
a. Calculate Strickler’s cash conversion cycle.
b. Assuming Strickler holds negligible amounts of cash and marketable securities,
calculate its total assets turnover and ROA.
c. Suppose Strickler’s managers believe the annual inventory turnover can be raised to
9 times without affecting sales. What would Strickler’s cash conversion cycle, total assets
turnover, and ROA have been if the inventory turnover had been 9 for the year?
Chapter 21 Solutions
Intermediate Financial Management
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