Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

P18-6 (similar to) EQuestion Help (Related to Checkpoint 18.2) (Calculating the operating and cash conversion cycle) Carraway Seed Company Inc. has for many years cultivated

image text in transcribed
P18-6 (similar to) EQuestion Help (Related to Checkpoint 18.2) (Calculating the operating and cash conversion cycle) Carraway Seed Company Inc. has for many years cultivated and sold what are known as heritage plants and seeds For example, the company has sought out older varieties of tomato plants that are no longer grown by commercial vegetable farmers since they either take too long to mature, do not ship well, or do not hold up for long on the store shell. The company has recently been considering ways to reduce its investment in working capital in order to make itself more prositable. At present the fim has an inventory conversion period of 82 days and the majority of its customers take advantage of its credit terms of 37 days. The company purchases its inventory items on credit terms that allow them 52 days to pay but has always followed a policy of making cash payments for invoices as soon as they are received, so the accounts payable deferral period is typically only 12 days a. What are Carraway's operating and cash conversion cycles? b. If Carraway were to decide to take full advantage of its credit terms and delay payment until the last possible date, how would this impact their cash conversion cycle? C. What would be your recommendation to the company with regard to its working capital management practices and why? a. Carraway's operating cycle is days (Round to the nearest whole number) Enter your answer in the answer box and then click Check Answer parts remaining Clear All Check Answe

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

Step: 3

blur-text-image

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

Quantitative Finance: An Object-Oriented Approach In C++

Authors: Erik Schlogl, Dilip B. Madan

1st Edition

1584884797, 978-1584884798

More Books

Students also viewed these Finance questions

Question

licensure as a psychologist in the respective jurisdiction; and

Answered: 1 week ago