Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

QUESTION 1 [25 MARKS] Use the given information about XYZ Pty Ltd to answer the questions that follow: Sales P10, 000,000 Average inventories P2, 000,000

QUESTION 1 [25 MARKS] Use the given information about XYZ Pty Ltd to answer the questions that follow: Sales P10, 000,000 Average inventories P2, 000,000 Cost of goods sold P8, 000,000 Receivables P666, 667 Average Accounts payable P666, 667

Required:

a. Define the cash conversion cycle. (2 marks)

b. Calculate XYZs Average Age of Inventory. (4 marks)

c. Calculate XYZs Average Collection Period. (4 marks)

d. Calculate the Accounts Payable Period. (4 marks)

e. Calculate the XYZs cash conversion cycle. (4 marks)

f. Advise XYZ on what they should do to reduce their cash conversion cycle. (3 marks)

g. Explain two strategies that XYZ can use to fund its cash conversion cycle requirements. (4 marks)

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

Fundamentals Of Corporate Finance

Authors: Richard A. Brealey, Marcus, Alan J, Myers, Stewart C.

2nd Edition

0070074860, 9780070074866

More Books

Students also viewed these Finance questions

Question

List the four parts of the self-motivation model.

Answered: 1 week ago

Question

Identify the four parts of the model for writing objectives.

Answered: 1 week ago