Fin 100 Week 9 Homework

Week 9 Homework Chapter 15: P1 & Chapter 16: P1P1. PreTy Lady Cosme±cs Products has an average produc±on process ±me of forty days. Finished goods are kept on hand for 15 days before they are sold. Accounts receivable are outstanding an average of thirty ²ve days and the ²rm receives forty days of credit on its purchasers from suppliers. a.Es±mate the average length of the ²rm’s short-term opera±ng cycle. How o³en would the cycle turn over in a year? Opera±ng cycle = inventory period + account receivable period= 15 days + 35 days = 50 days 365 days/50 days = 7.3 daysb.Assume net sales of $1,200,000 and cost of goods sold of $900,000. Determine the average investments in accounts receivable, inventories, and accounts payable. What would be the net ²nancing need considering only these three accounts?Average cost of goods sold = $900,000/365 $2465.75Average revenue = $1,200,000/365 $3287.67Inventory investment = average COGS X inventory conversion period = $2465.75 X 15= $36,986.25Average accounts receivable investments = $3287.67 X 35 days

Chapter 15: P1 1. Pretty Lady Cosmetic Products has an average production process time of forty days. Finished goods are kept on hand for an average of fifteen days before they are sold. Accounts receivable are outstanding an average of thirty-five days, and the firm receives forty days of credit on its purchases from suppliers. a. Estimate the average length of the firm’s short-term operating cycle. How often would the cycle turn over in a year?  Cash conversion cycle CCC = DIO + DSO - DPO  CCC = 15+35-40 = 10 days  Operating cycle CC starts from the day the firm raw material for production till realization of sales.  So OC = 40+15+35-40 = 50 days b. Assume net sales of $1,200,000 and cost of goods sold of $900,000. Determine the average investment in accounts receivable, inventories, and accounts payable. What would be the net financing need considering only these three accounts?  Annual Sales = $1200,000  COGS = $900,000  Days Inventory Outstanding (DIO): This addresses the question of how many days it takes to sell the entire inventory. The smaller this number is,

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