Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Chastain Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash conversion cyde. Chastain's 2019

image text in transcribed
Chastain Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash conversion cyde. Chastain's 2019 sales (all on credit) were $184,000, its cost of goods sold is 80% of sales, and it earned a net profit of 6%, or $11,040. It turned over its inventory 5 times during the year, and its DSO was 37.5 days. The firm had fixed assets totaling $41,000. Chastain's payables deferral period is 50 days. Assume 365 days in year for your calculations. a. Calculate Chastain's cash conversion cycle. Do not round intermediate calculations. Round your answer to two decimal places days b. Assuming Chastain holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. Do not round intermediate calculations. Round your answers to two decimal places. Total assets turnover: ROA: c. Suppose Chastain's managers believe that the inventory turnover can be raised to 8.1 times. What would Chastain's cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 8.1 for 2019? Do not round intermediate calculations. Round your answers to two decimal places days Cash conversion cycle: Total assets turnover: ROA

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Financial Planning For Executives And Entrepreneurs

Authors: Michael J. Nathanson, Jeffrey T. Craig, Jennifer A. Geoghegan, Nadine Gordon Lee, Michael A. Haber, Seth P. Hieken, Matthew C. Ilteris, D. Scott McDonald, Joseph A. Salvati, Stephen R. Stelljes

1st Edition

3030405273, 978-3030405274

More Books

Students also viewed these Finance questions

Question

9. Describe the characteristics of power.

Answered: 1 week ago