EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 9781337514835
Author: MOYER
Publisher: CENGAGE LEARNING - CONSIGNMENT
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 3, Problem 1P
a)
Summary Introduction
To determine: Average accounts receivables.
b)
Summary Introduction
To determine: Average level of inventory.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Vanity Press, Inc., has annual credit sales of $1.9 million and a gross profit margin of 35 percent. Round your answers to the nearest dollar.
If the firm wishes to maintain an average collection period of 60 days, what level of accounts receivable should it carry? (Assume a 365-day year.)
$ The inventory turnover for this industry averages seven times. If all of Vanity’s sales are on credit, what average level of inventory should the firm maintain to achieve the same inventory turnover figure as the industry? $
Zane Corporation has an inventory conversion period of 64 days,an average collection period of 28 days, and a payables deferral period of 41 days.a. What is the length of the cash conversion cycle?b. If Zane’s annual sales are $2,578,235 and all sales are on credit, what is the investmentin accounts receivable?c. How many times per year does Zane turn over its inventory? Assume that the cost ofgoods sold is 75% of sales. Use sales in the numerator to calculate the turnover ratio.
A company has total annual sales (all credit) of $400,000 and a gross profit margin of 20 percent. Its current assets are $80,000; current liabilities, $60,000; inventories, $30,000; and cash, $10,000.
a. How much average inventory should be carried if management wants the inventory turnover to be 4?
b. How rapidly (in how many days) must accounts receivable be collected if management wants to have an average of $50,000 invested in receivables? (Assume a 360-day year.)
Chapter 3 Solutions
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Ch. 3 - Prob. 1QTDCh. 3 - Prob. 2QTDCh. 3 - Prob. 3QTDCh. 3 - Prob. 4QTDCh. 3 - Prob. 5QTDCh. 3 - Prob. 6QTDCh. 3 - Prob. 7QTDCh. 3 - Prob. 8QTDCh. 3 - Prob. 9QTDCh. 3 - Prob. 10QTD
Ch. 3 - Prob. 11QTDCh. 3 - Prob. 12QTDCh. 3 - Prob. 13QTDCh. 3 - Prob. 14QTDCh. 3 - Prob. 1PCh. 3 - Prob. 2PCh. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Prob. 5PCh. 3 - Prob. 6PCh. 3 - Prob. 7PCh. 3 - Prob. 8PCh. 3 - Prob. 9PCh. 3 - Prob. 10PCh. 3 - Prob. 11PCh. 3 - Prob. 12PCh. 3 - Prob. 13PCh. 3 - Prob. 14PCh. 3 - Prob. 15PCh. 3 - Prob. 16PCh. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Prob. 21P
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Negus Enterprises has an inventory conversion period of 50 days, an average collection period of 35 days, and a payables deferral period of 25 days.Assume that cost of goods sold is 80% of sales.a. What is the length of the firm’s cash conversion cycle?b. If annual sales are $4,380,000 and all sales are on credit, what is thefirm’s investment in accounts receivable?c. How many times per year does Negus Enterprises turn over its inventory?arrow_forwardThe Zocco Corporation has an inventory conversion period of 60 days, an average of collection period of 38 days, and a payable deferral period of 30 days. Assume that cost of goods sold 75% of sales. a. What is the length of the firm’s cash conversion cycle? a. Zocco’s annual sales are $3,421,875 and all sales are on credit, what is the firm’s investment in accounts receivable? b. How many times per year does Zocco turn over its inventory?arrow_forwardOn average, a firm sells $2,000,000 in merchandise a month. It keeps inventory equal to one-half of its monthly sales on hand at all times. If the firm analyzes its accounts using a 365-day year, what is the firm’s inventory conversion period (ICP)? (Hint: ICP = 365/(sales/inventory)arrow_forward
- A firm with sales of $500,000 has average inventory of $200,000. T he industry average for inventory turn over is four time a year. What would be the redution in inventory if the firm were a turnover comparable to the industry average. please show all calculationarrow_forwardA company has total annual sales (all credit) of $400,000 and a gross profit margin of 20 percent. Its current assets are $80,000; current liabilities, $60,000; inventories, $30,000; and cash, $10,000. a. How much average inventory should be carried if management wants the inventory turnover to be 4? How rapidly (in how many days) must accounts receivable be collected if management wants to have an average of $50,000 invested in receivables? (Assume a 360-day year.)arrow_forwardA firm with sales of $500,000 has average inventory of $200,000. the industry average for inventory turnover is four time a year. what would be the reduction in inventory if this firm were to achieve a turnover comparable to the industry average?arrow_forward
- You prefer to extend credit on the assumption that you will be paid in full within 10 days of the sales. Firm X has average inventory of $720,000 with all cash sales (no credit sales) of $4,400,000. If you extend credit to this firm, can you expect to be paid on time? Assume 365 days in a year. Round your answer to the nearest whole number. The inventory turnover is days, therefore, you expect to be paid in 10 days.arrow_forwardWayne's Wells has sales for the year of P48,900 and an average inventory 21 of P8,800. The cost of goods sold id equal to 60 percent of sales and the profit margin is five percent. How many days on the average does it take the firm to sell an inventory item?arrow_forwardA company has total annual sales (all credit) of Rs.400,000 and a gross profit margin of 20 percent. Its current assets are Rs.80,000; current liabilities, Rs.60,000; inventories, Rs.30,000; and cash, Rs.10,000. a. How much average inventory should be carried if management wants the inventory turnover to be 4? b. How rapidly (in how many days) must accounts receivable be collected if management wants to have an average of Rs.50,000 invested in receivables? (Assume a 360-day year.)arrow_forward
- (16-11) Cash Conversion Negus Enterprises has an inventory conversion period of 50 days, an average collection period of 35 days, and a payables deferral period of 25 days. Assume that cost of goods sold is 80% of sales. Cycle a. What is the length of the firm's cash conversion cycle? b. If annual sales are $4,380,000 and all sales are on credit, what is the firm's investment in accounts receivable? C. How many times per year does Negus Enterprises turn over its inventory?arrow_forwardThe following financial information relates to XYZ Company: Inventory turnover: 5 times Accounts receivable turnover = 6 times Accounts payable turnover = 4 times XYZ gives its customers a credit period of 60 days. XYZ’s suppliers offer a credit period of 90 days. For simplicity, we assume that the year consists of 360 days. a) Calculate the operating and cash cycle for XYZ Company b) Evaluate the implications of the cash cycle for XYZ’s working capital managementarrow_forwardA retailer has annual sales of $500,000 and an average finished-goods inventory of$15,000. If the retailer sells each unit for an average of $25 and purchases the units for$15, what is its annual inventory turnover?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning
The management of receivables Introduction - ACCA Financial Management (FM); Author: OpenTuition;https://www.youtube.com/watch?v=tLmePnbC3ZQ;License: Standard YouTube License, CC-BY