Cartwright Brothers has the following balance sheet (all numbers are expressed in millions of dollars): Cash...
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Cartwright Brothers has the following balance sheet (all numbers are expressed in millions of dollars): Cash Accounts receivable Inventories Net fixed assets Total assets $ 250 250 250 1,250 $2,000 Accounts payable Notes payable Long-term debt Common stock Total claims $ 300 300 600 800 $2,000 are $10 million. Currently, Cartwright's average daily sales Cartwright's days sales outstanding (DSO). is well above the industry average of 15. Cartwright is implementing a plan that is designed to reduce its DSO to 15 without reducing its sales. If successful the plan will free up cash, half of which will be used to reduce notes payable and the other half will be used to reduce accounts payable. What will be the current ratio if Cartwright fully succeeds in implementing this plan? Cartwright Brothers has the following balance sheet (all numbers are expressed in millions of dollars): Cash Accounts receivable Inventories Net fixed assets Total assets $ 250 250 250 1,250 $2,000 Accounts payable Notes payable Long-term debt Common stock Total claims $ 300 300 600 800 $2,000 are $10 million. Currently, Cartwright's average daily sales Cartwright's days sales outstanding (DSO). is well above the industry average of 15. Cartwright is implementing a plan that is designed to reduce its DSO to 15 without reducing its sales. If successful the plan will free up cash, half of which will be used to reduce notes payable and the other half will be used to reduce accounts payable. What will be the current ratio if Cartwright fully succeeds in implementing this plan?
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To determine the impact of the plan on Cartwright Brothers financial ratios we need to calculate the new values for the relevant financial statement i... View the full answer
Related Book For
Advanced Accounting
ISBN: 978-0077431808
10th edition
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
Posted Date:
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