Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Aman Berhad is a manufacturer of industrial woods in Kedah. Its current average production of woods amounts to 1.2 million units and the price for
Aman Berhad is a manufacturer of industrial woods in Kedah. Its current average production of woods amounts to 1.2 million units and the price for each unit is RM20. The average inventory of the firm is RM3.1 million and the average total cost of goods sold is 70% of the total sales. The company's average payables are RM1.3 million while its average receivables are higher by RM900 000 than its payables. The firm annual operating cycle investment is $3,600,000. The firm's required return on investments is 6%. Assume a360-day year. (a) Find the CCC of Aman Berhad. (b) What is the firm's annual savings if the cash conversion cycle is reduced by 9 days? (c) Based on your answer in (a), i. Find the CCC if the receivables drop to RM1.9 million. ii. Find its operating cycle if the company decides to reduce the inventory level by 42%. What will be the CCC? iii.Compute the CCC if the average payables are increased by a quarter. Aman Berhad is a manufacturer of industrial woods in Kedah. Its current average production of woods amounts to 1.2 million units and the price for each unit is RM20. The average inventory of the firm is RM3.1 million and the average total cost of goods sold is 70% of the total sales. The company's average payables are RM1.3 million while its average receivables are higher by RM900 000 than its payables. The firm annual operating cycle investment is $3,600,000. The firm's required return on investments is 6%. Assume a360-day year. (a) Find the CCC of Aman Berhad. (b) What is the firm's annual savings if the cash conversion cycle is reduced by 9 days? (c) Based on your answer in (a), i. Find the CCC if the receivables drop to RM1.9 million. ii. Find its operating cycle if the company decides to reduce the inventory level by 42%. What will be the CCC? iii.Compute the CCC if the average payables are increased by a quarter
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started