Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. nancy has just been appointed as the cfo of a smal

Nancy has just been appointed as the CFO of a small-sized food company ABC Food,...

80.2K

Verified Solution

Question

Finance

Nancy has just been appointed as the CFO of a small-sized food company ABC Food, Inc., and is keen to measure the firms cash conversion cycle, operating cycle, and payment cycle, so as to see if any changes are warranted. She collects the necessary information at the end of December 2020, and puts together the table below (Assume there are 365 days in a year):
image
Total sales $800,000 Cost of goods sold $640,000 Accounts receivable Inventory Accounts payable Beginring Balance Ending Balance $40,000 $36,000 $10,000 $ 6,000 $9,000 $15,000 a) Calculate the average payable period and average receivable period (10 marks) b) Calculate the cash conversion cycle for the year to end December 2020. (10 marks) c) ABC Food, Inc., has recently installed a just-in-time (JIT) inventory system Describe the effect this is likely to have on the company's carrying costs, and operating cycle. (4 marks) Indicate the effect that the following will have on the operating cycle. Use the letter I to indicate an increase the letter D for a decrease, and the letter N for no change d) Average receivables goes up. e) Payments to suppliers are accelerated f) Credit repayment times for customers are increased

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students