Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Mako Industries is considering changes in its working capital policies to improve its cash flow cycle. Mako's sales last year were $5 million (all on

image text in transcribed
Mako Industries is considering changes in its working capital policies to improve its cash 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 annual inventory turnover can be raised to 8 times without affecting sale or profit margins. What would Mako's ROA have been if the inventory tumover had been 8 for the year? O 19.15% 18.02% @ 18.14% 24.11%

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

Handbook Of Financial Econometrics

Authors: Yacine Ait-Sahalia, Lars Peter Hansen

1st Edition

044450897X, 978-0444508973

More Books

Students also viewed these Finance questions

Question

Explain the significance of the issue of Internet taxation.

Answered: 1 week ago