Please show calculation so I can follow along. Thank you!

Question 1

SJU Resources last year reported sales of $70 million and an inventory turnover ratio of 2.5. The company is now adopting a new inventory system. If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 4 while maintaining the same level of sales, how much cash will be freed up?

Question 2

Milberg Manufacturing sells on terms of 2/10, net 30. Total sales for the year are 1,500,000. Thirty percent of customers pay on the 10th day and take discounts; the other 70% pay, on average, 50 days after their purchases.

a. What is the days sales outstanding?

b. What is the average amount of receivables?

c. What would happen to average receivables if Snider toughened its collection policy with the result that all nondiscount customers paid on the 35th day?

Question 3

Merton Analytics is considering changes in its working capital policies to improve its cash flow cycle. Merton's sales last year were $30,250,000 (all on credit), and its net profit margin was 6%. Its inventory turnover was 7.5 times during the year, and its DSO was 41 days. Its annual cost of goods sold was $24,200,000. The firm had fixed assets totaling $2.5 million. Merton's payables deferral period is 45 days.

a. Calculate Merton's cash conversion cycle.

b. Assuming Merton holds negligible amounts of cash and marketable securities,

calculate its total assets turnover and ROA.

c. Suppose Merton's managers believe the annual inventory turnover can be raised to 9 times without affecting sales. What would Merton's cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 9 for the year?

Question 4

Calculate the nominal annual cost of nonfree trade credit under each of the following terms. Assume that payment is made either on the discount date or on the due date.

a. 1/12, net 20

b. 1/10, net 45

c. 3/15, net 45

d. 2/ 10, net 50

e. 2/15, net 40