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Mako Industries is considering changes in its working capital policies to improve its ca flow cycle. Mako's sales last year were $5 million (all on
Mako Industries is considering changes in its working capital policies to improve its ca flow cycle. Mako's sales last year were $5 million (all on credit), and its net profit margin was 6%. Its inventory turnover was 7.0 times during the year, and its DSO was. 45 days. Its annual cost of goods sold was $3.5 million. The firm had fixed assets totaling $600,000. Mako's payables deferral period is 30 days. Suppose Mako's managers believe the annualinventory turnover can be raised to 10 times without affecting sale or profit margins. What would Mako's ROA have been if the inventory turnover had been 10 for the year? 18.02% 25.05% 19.15% 24.11%
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