Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

(Related to Checkpoint 18.2) (Calculating the cash conversion cycle) Network Solutions just introduced a new, fully automated manufacturing plant that produces 2,500 wireless routers per

image text in transcribed

(Related to Checkpoint 18.2) (Calculating the cash conversion cycle) Network Solutions just introduced a new, fully automated manufacturing plant that produces 2,500 wireless routers per day with materials costs of $45 per router and no other costs. The average number of days a router is held in inventory before being sold is 52 days. In addition, they generally pay their suppliers in 35 days, while collecting from their customers after 15 days. a. What is the cash conversion cycle? b. What would happen to the cash conversion cycle if they could stretch their payments to suppliers from 35 days to 55 days? c. How much would working capital be reduced if they stretched their payments to suppliers from 35 days to 55 days? a. The cash conversion cycle is days. (Round to the nearest whole number.)

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

Valuation, Measuring And Managing The Value Of Companies

Authors: Tim Koller, Marc Goedhart, David Wessels

7th Edition

1119611865, 9781119611868

More Books

Students also viewed these Finance questions

Question

What are the APPROACHES TO HRM?

Answered: 1 week ago