Following are the financial statements for the Chenhai Manufacturing Corporation for 2009 and 2010. The venture is in financial distress and hopes to turn around its financial performance in the near future.

A. Calculate the sale-to-cash conversion period for Chenhai in both 2009 and 2010.
B. Calculate the inventory-to-sale conversion period for Chenhai in both 2009 and 2010.
C. Calculate the purchase-to-payment conversion period for Chenhai in both 2009 and 2010. Also determine the length of the cash conversion cycle for both 2009 and 2010.
D. What type of working capital restructuring might Chenhai undertake to turn around its financial performance? What other type of asset restructuring might Chenhai consider undertaking?
E. What type(s) of operations restructuring might Chenhai attempt during 2011?
F. What type(s) of financial restructuring might Chenhai attempt during 2011?
G. What prevailing conditions (economic, competitive, etc.) might cause you to believe that Chenhai€™s situation may be a turnaround opportunity versus a permanentproblem?

Transcribed Image Text:

CHENHAI MANUFACTURING CORPORATION 2009 2010 S 10,000 250,000 490,000 750,000 400,000 1,150,000 S 170,000 70,000 Cash Accounts receivable Inventories S 50,000 200,000 450,000 700,000 400,000 $1,100,000 S 130,000 50,000 Total current assets Fixed assets, net Total assets Accounts payable Accruals 2009 90,000 270,000 2010 90,000 330,000 Bank loan Total current liabilities Long-term debt Common stock ($10 par value Capital surplus Retained eamings 300,000 300,000 400,000 300,000 50,000 180,000 50,000 70,000 Total liabilities and $1,100,000 equity 2009 2010 $1,000,000 ー700,000 300,000 -150,000 -150,000 Net sales Cost of goods sold Gross profit Marketing General and adminis- trative (G&A) Depreciation S1,400,000 780,000 620,000 -130,000 -150,000 EBIT Earnings before taxes Net income 40,000 300,000 45,000 255,000 102,000 S 153,000 -53,000 53,000 57,000 -110,000 0* S-110000 Interest Income taxes (40%) Note that a tax credit would be generated and could be used if the firm returns to profitability in the future.