Question
Garrett industries turns over its inventory 7 times each year it has an average collection period of 43 days and an average payment of 28
Garrett industries turns over its inventory 7 times each year it has an average collection period of 43 days and an average payment of 28 days. The firms annual sales are $3.4 million. Assume there is no difference in the investment per dollar of sales in inventory, receivables, payables and a 365 day year.
(a) the firms cash conversion cycle, CCC is _____ days
the firms daily cash operation expenditure is $_______
the amount of resources needed to support the firms cash coversion cycle is $_______
(b) the firms cash conversion cycle and resource investment requirement if it makes the following changes simultaneously.
(1) shortens the average age of inventory by 4 days
(2) speeds the collection of accounts receivable by and average of 8 days
(3) extends the average payment period by 8 days
The new cash conversion cycle CCC ______days
The new amount of resources needed to support the firms cash conversion cycle is $________
(c) if the firm pays 12% for its resource investment it could increase it annual profit as a result of the changes in part b by $_______
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