29 Jun Question 1. Data on Liu Inc.
Question
1. Data on Liu Inc. for the most recent year are shown below, along with the inventory conversion period (ICP) of the firms against which it benchmarks. The firm’s new CFO believes that the company could reduce its inventory enough to reduce its ICP to the benchmarks’ average. If this were done, by how much would inventories decline? Use a 365-day year.
Cost of goods sold = $85,000
Inventory = $20,000
Inventory conversion period (ICP) = 85.88
Benchmark inventory conversion period (ICP) = 38.00
(Points : 10)
$ 7,316
$ 8,129
$ 9,032
$10,036
$11,151
Question 2. 2.
Data on Mertz Co., for the most recent year are shown below, along with the payables deferral period (PDP) for the firms against which it benchmarks. The firm’s new CFO believes that the company could delay payments enough to increase its PDP to the benchmarks’ average. If this were done, by how much would payables increase? Use a 365-day year.
Cost of goods sold = $75,000
Payables = $5,000
Payables deferral period (PDP) = 24.33
Benchmark payables deferral period = 30.00
(Points : 10)
$ 764
$ 849
$ 943
$1,048
$1,164
Question 3. 3.
Shulman Inc. has the following data, in thousands. Assuming a 365-day year, what is the firm’s cash conversion cycle?
Annual sales = $45,000
Annual cost of goods sold = $30,000
Inventory = $4,500
Accounts receivable = $1,800
Accounts payable = $2,500
(Points : 10)
28 Days
32 Days
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