The Christie Corporation is trying to determine the effect of its inventory turnover;ratio and days sales outstanding (DSO) on its cash flow cycle. Christie?s sales last year;(all on credit) were $150,000, and it earned a net profit of 6%, or $9,000. It turned;over its inventory 7.5 times during the year, and its DSO was 36.5 days. Its annual;cost of goods sold was $121,667. The firm had fixed assets totaling $35,000. Christie?s;payables deferral period is 40 days.;a. Calculate Christie?s cash conversion cycle.;b. Assuming Christie holds negligible amounts of cash and marketable securities;calculate its total assets turnover and ROA.;c. Suppose Christie?s managers believe the annual inventory turnover can be raised;to 9 times without affecting sales. What would Christie?s cash conversion cycle;total assets turnover, and ROA have been if the inventory turnover had been 9;for the year?
Paper#19690 | Written in 18-Jul-2015Price : $34