Cash conversion cycle
Chastain Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash conversion cycle. Chastain's 2016 sales (all on credit) were $272,000; its cost of goods sold is 80% of sales; and it earned a net profit of 7%, or $19,040. It turned over its inventory 7 times during the year, and its DSO was 37.5 days. The firm had fixed assets totaling $26,000. Chastain's payables deferral period is 35 days. Assume 365 days in year for your calculations.
Calculate Chastain's cash conversion cycle. Round your answer to two decimal places. Do not round intermediate calculations.
days
Assuming Chastain holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. Round your answers to two decimal places. Do not round intermediate calculations.
Total assets turnover ROA %
Suppose Chastain's managers believe that the inventory turnover can be raised to 8.5 times. What would Chastain's cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 8.5 for 2016? Round your answers to two decimal places. Do not round intermediate calculations.
Cash conversion cycle days Total assets turnover ROA %
Cash conversion cycle
Chastain Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash conversion cycle. Chastain's 2016 sales (all on credit) were $272,000; its cost of goods sold is 80% of sales; and it earned a net profit of 7%, or $19,040. It turned over its inventory 7 times during the year, and its DSO was 37.5 days. The firm had fixed assets totaling $26,000. Chastain's payables deferral period is 35 days. Assume 365 days in year for your calculations.
Calculate Chastain's cash conversion cycle. Round your answer to two decimal places. Do not round intermediate calculations.
days
Assuming Chastain holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. Round your answers to two decimal places. Do not round intermediate calculations.
| Total assets turnover | ||
| ROA | % |
Suppose Chastain's managers believe that the inventory turnover can be raised to 8.5 times. What would Chastain's cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 8.5 for 2016? Round your answers to two decimal places. Do not round intermediate calculations.
| Cash conversion cycle | days | |
| Total assets turnover | ||
| ROA | % |
Related questions
Christie Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash conversion cycle. Christie's 2012 sales (all on credit) were $180,000; its cost of goods sold is 80% of sales; and it earned a net profit of 6%, or $10,800. It turned over its inventory 5 times during the year, and its DSO was 39.5 days. The firm had fixed assets totaling $41,000. Christie's payables deferral period is 45 days. Assume 365 days in year for your calculations.
Calculate Christie's cash conversion cycle. Round your answer to two decimal places.
__days
Assuming Christie holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. Round your answer to two decimal places.
| Total assets | $ | |
| ROA | % |
Suppose Christie's managers believe that the inventory turnover can be raised to 9.7 times. What would Christie's cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 9.7 for 2012?
| Cash conversion cycle | days | |
| Total assets | $ | |
| ROA | % |
