Part I
Assume that a company has $20 million in revenue and its cost of goods sold is 70% of its sales. Additionally, the firm has $3 million of inventories, $2 million in payables, and $2 million in receivables. What’s the firm’s cash conversion cycle (CCC)? What does this indicate (be sure to includes details, not just 1 or 2 sentences)? Do you think that the company should improve its CCC (be sure to includes details, not just 1 or 2 sentences)? ? If so, what are some ways that it can do that (be sure to includes details, not just 1 or 2 sentences)? If not, why do you think that’s the case (be sure to includes details, not just 1 or 2 sentences)?
Part II
Assume that a firm has a payables deferral period of 40 days, an inventory conversion period of 62 days, and an average collection period of 29 days.
1. What’s the firm’s cash conversion cycle? ( be sure to includes details, not just 1 or 2 sentences)?
2. Assume that all of the firm’s sales are on credit. If the firm has annual sales of $4 million, what’s the accounts receivable investment (be sure to includes details, not just 1 or 2 sentences)?
3. How many times a year will the firm turn over its inventory? ( be sure to includes details, not just 1 or 2 sentences)?
Assignment Expectations
You are expected to:
• Describe the purpose of the report and provide a conclusion. An introduction and a conclusion are important because many busy individuals in the business environment may only read the first and the last paragraph. If those paragraphs are not interesting, they never read the body of the paper.
• Answer the Case Assignment question(s) clearly and provide necessary details.
• Write clearly and correctly—that is, no poor sentence structure, no spelling and grammar mistakes, and no run-on sentences.
• Provide citations to support your argument and references on a separate page. (All the sources that you listed in the references section must be cited in the paper.) Use APA format to provide citations and references.