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Neko [114]
3 years ago
10

(Related to Checkpoint​ 18.2) ​(Calculating the operating and cash conversion​ cycle) Carraway Seed Company Inc. has for many ye

ars cultivated and sold what are known as heritage plants and seeds. For​ example, the company has sought out older varieties of tomato plants that are no longer grown by commercial vegetable farmers since they either take too long to​ mature, do not ship​ well, or do not hold up for long on the store shelf. The company has recently been considering ways to reduce its investment in working capital in order to make itself more profitable. At present the firm has an inventory conversion period of 95 days and the majority of its customers take advantage of its credit terms of 20 days. The company purchases its inventory items on credit terms that allow them 52 days to pay but has always followed a policy of making cash payments for invoices as soon as they are​ received, so the accounts payable deferral period is typically only 12 days. a. What are​ Carraway's operating and cash conversion​ cycles? b. If Carraway were to decide to take full advantage of its credit terms and delay payment until the last possible​ date, how would this impact their cash conversion​ cycle? c. What would be your recommendation to the company with regard to its working capital management practices and​ why?
Business
1 answer:
kakasveta [241]3 years ago
4 0

Answer:

a.Operating Cycle = Inventory Conversion period + Days Sales Outstanding = 100 + 35 = 135 Days

Cash Conversion Cycle = Inventory Conversion period + Days Sales Outstanding - Days Payables Outstanding

                              = 100 + 35 - 11 = 124 Days

b.If Carraway were to decide to take full advantage of its credit terms and delay payment until the last possible date , their cash conversion cycle is 100 + 35 - 51 = 84 Days

c.Carraway should take its suppliers offer to finance its inventory with the interest free 35 Day loan

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Management is the process used to accomplish organizational goals through planning, organizing, leading, and controlling people and other organizational resources. Management is used to control its employees to maximize its effort to obtain its objective using the available resources to meet the customer demand.

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7 0
3 years ago
Annie Rasmussen, capital, as of December 31, 2019, assuming that assets decreased by $168,000 and liabilities increased by $15,0
satela [25.4K]

Answer:

c. $357,000

d. $733,000

e. $120,000

Explanation:

As we know that

Total assets = Total liabilities + Shareholder equity

The computation is shown below:

c. Updated assets would be

= $720,000 - $168,000

= $552,000

And, the updated liabilities would be

= $180,000 + $15,000

= $195,000

So, the updated capital would be

= $552,000 - $195,000

= $357,000

d. Updated assets would be

= $720,000 - $175,000

= $895,000

And, the updated liabilities would be

= $180,000 - $18,000

= $162,000

So, the updated capital would be

= $895,000 - $162,000

= $733,000

e. The opening capital would be

= Total assets - total liabilities

= $720,000 - $180,000

= $540,000

And, the ending capital would be

= Total assets - total liabilities

= $880,000 - $220,000

= $660,000

So, the gain would be

= Ending capital balance - opening capital balance

= $660,000 - $540,000

= $120,000

8 0
3 years ago
Corner Jewelers, Inc. recently analyzed the project whose cash flows are shown below. However, before the company decided to acc
andreev551 [17]

Answer:

correct option is a. −$59.03

Explanation:

given data

Old cost of capital (r)   8.00%        New cost of capital (r)  11.25%

year                                 0                1                                     2                  3

cash flow                        -$1000       $410                              $410        $410

solution

we know that here old cost of capital (r) NPV will be

old cost of capital (r) NPV = cash flow 0 year + cash flow × \frac{1-(1+rate)^{-time}}{rate}

put here value

old cost of capital (r) NPV = -1000 + 410 × \frac{1-(1+0.08)^{-3}}{0.08}

old cost of capital (r) NPV = $56.61

and

new cost of capital (r) NPV will be

new cost of capital (r) NPV = cash flow 0 year + cash flow × \frac{1-(1+rate)^{-time}}{rate}

put here value

new cost of capital (r) NPV = -1000 + 410 × \frac{1-(1+0.1125)^{-3}}{0.1125}

new cost of capital (r) NPV = -$2.42

so difference is

Difference = -$2.42 - $56.61

Difference = -$59.03

so correct option is a. −$59.03

7 0
3 years ago
When Simple Semiconductors was operating at the minimum efficient scale of 10,000–12,000 units per month, the firm's cost per un
Sauron [17]

Answer:

Diseconomies of scale.

Explanation:

In microeconomics, diseconomies of scale are the cost disadvantages that economic actors accrue due to an increase in organizational size or on output, resulting in production of goods and services at increased per-unit costs.

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3 years ago
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Tju [1.3M]

The main reason for the success of the Beats Electronics is: <u>B. it created a perception that owning its products was cool.</u>

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Beats Electronics was able to outperform in the premium headphone market. They were able to out-stand from their competitive companies like JBL, Bose, Audio-Technica, Skullcandy and Sennheiser.

Beats Electronics made their customers to believe that owning their product is cool. They created a perception to the customers which made them to lead in the market.

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