Cash management is a very important function of managers. Companies need to manage their operations in a way that they can sustain growth and yet not run out of cash. Consider the case of the Extensive Enterprise Inc.: Extensive Enterprise Inc. has forecasted sales of $27,000,000 for next year and expects its cost of goods sold (COGS) to remain at 70% of sales. Currently, the firm holds $2,700,000 in inventories, $1,800,000 in accounts receivable, and $2,400,000 in accounts payable. Approximately how long does it take Extensive Enterprise to convert its raw materials to its finished products and then to sell those goods? (Note: Use 365 days as the length of a year in all calculations, and round all values to two decimal places.) O 54.75 days O 36.50 days O 39.11 days O 52.14 days On average, it takes from the time a sale is made until the time cash is collected from customers. On average, it takes 19.46 days Extensive Enterprise purchases materials firms prefer a 24.33 days 18.25 days What is the length of 26.76 days cerprise's cash conversion cycle (CCC)? O 30.12 days from the time a sale is made until the time cash is collected from customers. omer credit when it buys raw materials from its suppliers. On average, it takes cash to its suppliers. The length of Extensive Enterprise's cash conversion cycle (CCC) is after the firm In general, On average, it takes from the time a sale is made until time cash is collected from customers. Extensive Enterprise relies on customer credit when it buys raw materials from its suppliers. On average, it takes purchases materials before it sends cash to its suppliers. The length of Extensive Enterprise's cash conversion cyc firms prefer a CCC. What is the length of Extensive Enterprise's cash conversion cycle (CCC)? O 30.12 days O25.60 days 39.40 days 46.35 days 37.08 days 53.30 days after the firm . In general, On average, it takes from the time a sale is made until the time cash is collected from customers. Extensive Enterprise relies on customer credit when it buys raw materials from its suppliers. On average, it takes purchases materials before it sends cash to its suppliers. The length of Extensive Enterprise's cash conversion cycle (CCC) is firms prefer a CCC. 25.60 What is the length of Extensive Enterprise's cash conversion cycle (CCC)? 30.12 O 30.12 days after the firm . In general, On average, it takes from the time a sale is made until the time cash is collected from customers. Extensive Enterprise relies on customer credit when it buys raw materials from its suppliers. On average, it takes purchases materials before it sends cash to its suppliers. The length of Extensive Enterprise's cash conversion cycle (CCC) is CCC. firms prefer a longer What is the le tensive Enterprise's cash conversion cycle (CCC)? shorter O 30.1 25. 60 days after the firm In general, What is the length of Extensive Enterprise's cash conversion cycle (CCC)? O 30.12 days O 25.60 days O 36.14 days O 27.11 days A-Z o In general, firms prefer a CCC. shorter The management at Exter prise wants to continue its internal discussions regarding its cash management. One of the finance team members presents the following cas longer phorts: Case in Discussion Little Cow Construction Company's management plans to finance its operations with bank loans that will be repaid as soon as cash is Case in Discussion Little Cow Construction Company's management plans to finance its operations with bank loans that will be repaid as soon as cash is available. The company's management expects that it will take 40 days to manufacture and sell its products and 35 days to receive payment from its customers. Little Cow Construction Company's CFO has told the rest of the management team that they should expect the length of the bank loans to be approximately 75 days. Which of the following responses to the CFO's statement is most accurate? O The CFO's approximation of the length of the bank loans should be accurate, because it will take 75 days for the company to manufacture, sell, and collect cash for its goods. All these things must occur for the company to be able to repay its loans from the bank. O The CFO is not taking into account the amount of time the company has to pay its suppliers. Generally, there is a certain length of time between the purchase of materials and labor and the payment of cash for them. The CFO can reduce the estimated length of the bank loan by this amount of time. Is it possible for a firm to have a negative CCC? O Yes O No
