Calculations for the Cash Conversion Cycle, explain Cycle Calculations

Cash conversion cycle (CCC)=AAI+ACPAPP Old accounts payable =10 days ($14,000,000360 days )=$388,889 New accounts payable =30 days ($14,000,000360 days )=$1,166,667 Change in accounts payable =$1,166,667$388,889=$777,778 Because accounts payable has increased, the amount represents a decrease in net working capital. Reduction in resource investment =$777,778 Annual profit increase =0.12$777,778=$93,333 Assignment 4b: Cash Conversion Discussion Objective: Compute the cash conversion cycle. Mindset: Understand the importance of a cash budget and a capital budget. Instructions The cash conversion cycle is an important metric in gauging the firm's cach flow through the organization. It measures the length of time it takes a firm to convert cash invested into its operations back into cash. The efficiency of the cycle can be a valuable tool for management and aid its management of current assets and liabilities. The formula is: Cash Conversion Cycle=Average Age of lnventory +Average Collection Period - Average Payment Period. As the firm improves their operations, collection and payment processes, the CCC will improve as well. - Read Chapter 14 of the textbook by Gitman \& Zutter. - Watch video: Cash Conversion Cycle B - Using problems ST 14-1, P14-2 and P14-3 from the end of the chapter, perform calculations for the Cash Conversion Cycle. - Be prepared to discuss the learnings related to the above calculations - It is not necessary to apply a formatting style for this assignment except when using a source to support your writing. - Initial post due by Wednesday. Write a 200-word post addressing the points above. Be sure to include information from appropriate texts with proper - Replies due by Saturday. After reading the posts of all your fellow students, reply to two fellow students with a minimum 100 -word post engaging their citations. initial post. Feel free to ask questions regarding the information they share. a. Data: SOC=60,000gallons=$200perorder=$1pergallonperyear Calculation: EOQ=C2SO=$1260,000$200=24,000,000=4,899gallons b. Data: Lead time =20 days Daily usage =60,000 gallons /365 days =164.38gallons/day Calculation: Reorder point = lead time in days daily usage =20 days 164.38 gallons/day =3,287.6 gallons Tabular calculation of the effects of relaxing credit standards on Regency Rug Repair Company: Recommendation: Because a net loss of $5,625 is expected to result from relaxing credit standards, the proposed plan should not be implemented. Cash conversion cycle (CCC)=AAI+ACPAPP Old accounts payable =10 days ($14,000,000360 days )=$388,889 New accounts payable =30 days ($14,000,000360 days )=$1,166,667 Change in accounts payable =$1,166,667$388,889=$777,778 Because accounts payable has increased, the amount represents a decrease in net working capital. Reduction in resource investment =$777,778 Annual profit increase =0.12$777,778=$93,333 Assignment 4b: Cash Conversion Discussion Objective: Compute the cash conversion cycle. Mindset: Understand the importance of a cash budget and a capital budget. Instructions The cash conversion cycle is an important metric in gauging the firm's cach flow through the organization. It measures the length of time it takes a firm to convert cash invested into its operations back into cash. The efficiency of the cycle can be a valuable tool for management and aid its management of current assets and liabilities. The formula is: Cash Conversion Cycle=Average Age of lnventory +Average Collection Period - Average Payment Period. As the firm improves their operations, collection and payment processes, the CCC will improve as well. - Read Chapter 14 of the textbook by Gitman \& Zutter. - Watch video: Cash Conversion Cycle B - Using problems ST 14-1, P14-2 and P14-3 from the end of the chapter, perform calculations for the Cash Conversion Cycle. - Be prepared to discuss the learnings related to the above calculations - It is not necessary to apply a formatting style for this assignment except when using a source to support your writing. - Initial post due by Wednesday. Write a 200-word post addressing the points above. Be sure to include information from appropriate texts with proper - Replies due by Saturday. After reading the posts of all your fellow students, reply to two fellow students with a minimum 100 -word post engaging their citations. initial post. Feel free to ask questions regarding the information they share. a. Data: SOC=60,000gallons=$200perorder=$1pergallonperyear Calculation: EOQ=C2SO=$1260,000$200=24,000,000=4,899gallons b. Data: Lead time =20 days Daily usage =60,000 gallons /365 days =164.38gallons/day Calculation: Reorder point = lead time in days daily usage =20 days 164.38 gallons/day =3,287.6 gallons Tabular calculation of the effects of relaxing credit standards on Regency Rug Repair Company: Recommendation: Because a net loss of $5,625 is expected to result from relaxing credit standards, the proposed plan should not be implemented