1.Meko Industries is considering changes in its working capital policies to improve its cash flow cycle. Meko's sales last year were $5.5million (all on credit), and its net profit margin was 6%. Its inventory turnover was 7.0 times during the year, and its DSO was 45days. Its annual cost of goods sold was $3.85million. The firm had fixed assets totalling $725,000. Meko's payables deferral period is 50 days.

Suppose Meko's manager believe the annual inventory turnover can be raised to 9 times without affecting sales or profit margins.what would be meko's ROA have been if the inventory turnover had been 9 for the year....??

2.Piedmont Industries sells on terms of 2/10 net 30. Total sales for the year are $1 million. Thirty per cent of customers pay on the 10th day and take discounts; the other 70% pay, on average,50 days after their purchases.

What would happen to average receivables if piedmont toughened its collection policy with the result that all non-discount customers paid on the 35th day..??

3.Rao Construction recently reported $9.00 million of sales, $4.5 million of operating costs other than depreciation, and $900,000 million of depreciation. The company had no amortization charges, It had $3.5 million of bonds outstanding that carry a 8.00% interest rate, and its federal-plus-state income tax rate was 25%. In order to sustain its operations and thus generate sales and cash flows in the future, the firm was required to spend $800,000 to buy new fixed assets and to invest $200,000 in net operating working capital, How much free cash flow did Rao generate...??