Question
Given the following: Income Balance Revenue $10,000,000 Cash $200,000 COGS $7,500,000 Accounts receivable $1,200,000 Gross profit $2,500,000 Inventory $400,000 Total current assets $1,800,000 Total SG&A
Given the following: Income Balance Revenue $10,000,000 Cash $200,000 COGS $7,500,000 Accounts receivable $1,200,000 Gross profit $2,500,000 Inventory $400,000 Total current assets $1,800,000 Total SG&A $1,850,000 Total fixed assets $1,000,000 EBITDA $650,000 Total assets $2,800,000 Depreciation $75,000 Accounts payable $600,000 Interest $75,000 Other short term liabilities $200,000 Net profit $500,000 Total short term liabilities $800,000 Total long term debt $600,000 Total liabilities $1,400,000 Total owners equity $1,400,000 Total liabilities & equity $2,800,000 Please calculate (3 points each): What is the company's Days Sales Outstanding (assuming all sales on credit)? If DSO decreased by 2 days, what would Accounts Receivable be? If DSO decreased by 2 days, what would Cash be? If DSO decreased by 2 days, what would Net Profit be? What is the company's Days Inventory Outstanding? If DIO decreased by 2 days, what would Inventory be? If DIO decreased by 2 days, what would Cash be? If DIO decreased by 2 days, what would Net Profit be? Assuming that COGS equal Purchases, what is the company's Days Payables Outstanding? If DPO decreased by 2 days, what would Accounts Payable be? If DPO decreased by 2 days, what would Cash be? If DPO decreased by 2 days, what would Net Profit be? What is the company's Cash Conversion Cycle? What is the company's Current Ratio? What is the company's Quick Ratio? What is the company's Return on Assets? What is the company's Return on Equity? If we are willing to go as high as a Debt to EBITDA ratio of 2 (not counting Accounts Payable), how much additional debt could we assume? Using our simple approach to calculating funding needs, to increase revenues by 20%, how much additional funding do we need regardless of source? If gross margin increased by 1% (of revenues) with the same revenues, what would net profit be?
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