Chastain Corporation is trying to determine the effect of its inventory turnover ratio and days sales...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
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 2021 sales (all on credit) were $289,000, its cost of goods sold is 80% of sales, and it earned a net profit of 3%, or $8,670. It turned over its inventory 5.1 times during the year, and its DSO was 34 days. The firm had fixed assets totaling $35,000. Chastain's payables deferral period is 35 days. Assume 365 days in year for your calculations. a. Calculate Chastain's cash conversion cycle. Do not round intermediate calculations. Round your answer to two decimal places. days b. Assuming Chastain holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. Do not round intermediate calculations. Round your answers to two decimal places. Total assets turnover: ROA: % c. Suppose Chastain's managers believe that the inventory turnover can be raised to 7.88 times. What would Chastain's cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 7.88 for 2021? Do not round intermediate calculations. Round your answers to two decimal places. Cash conversion cycle: Total assets turnover: ROA: days % 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 2021 sales (all on credit) were $289,000, its cost of goods sold is 80% of sales, and it earned a net profit of 3%, or $8,670. It turned over its inventory 5.1 times during the year, and its DSO was 34 days. The firm had fixed assets totaling $35,000. Chastain's payables deferral period is 35 days. Assume 365 days in year for your calculations. a. Calculate Chastain's cash conversion cycle. Do not round intermediate calculations. Round your answer to two decimal places. days b. Assuming Chastain holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. Do not round intermediate calculations. Round your answers to two decimal places. Total assets turnover: ROA: % c. Suppose Chastain's managers believe that the inventory turnover can be raised to 7.88 times. What would Chastain's cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 7.88 for 2021? Do not round intermediate calculations. Round your answers to two decimal places. Cash conversion cycle: Total assets turnover: ROA: days %
Expert Answer:
Answer rating: 100% (QA)
To calculate Chastain Corporations cash conversion cycle total assets turnover and return on assets ... View the full answer
Related Book For
Fundamentals Of Financial Management
ISBN: 9781111795207
11th Edition
Authors: Richard Bulliet, Eugene F Brigham, Brigham/ Houston
Posted Date:
Students also viewed these finance questions
-
Chastain Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash conversion cycle. Chastains 2021 sales (all on credit) were...
-
The Christie Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash flow cycle. Christies sales last year (all on credit) were...
-
You borrowed $325000 using a 30- year fixed rate mortgage with a 5.25% interest rate: A) What is your schedule monthly payment? B) What is the amount of interest and principal paid with the first...
-
One heater uses 340 W of power when connected by itself to a battery. Another heater uses 240 W of power when connected by itself to the same battery. How much total power do the heaters use when...
-
May a taxpayer take his or her tax case directly to the U.S. Supreme Court?
-
In the benzene adsorber of Example 9.7, the flow rate is increased to \(0.25 \mathrm{~m}^{3} / \mathrm{s}\). Calculate the breakthrough time and the fraction of the bed adsorption capacity that has...
-
Day Ko Incorporated presented the following comparative income statements for 2009 and 2008: Other relevant financial information follows: Required a. How did 2009 net sales compare with 2008? b. How...
-
Maya purchased a boat for $18,340. Its value depreciated by 15% in the first year she owned it. What was her boat worth at the end of this first year?
-
use ASCE 7 -10 2.21 Given: ASCE 7 seismic design force requirements Find: a. The formulas for the base shear. Give section reference. b. The longest mapped maximum considered spectral response accel-...
-
Management accounting literature is abundant with discussions and commentaries on the changing roles of management accountants. The advent of Johnson and Kaplan's, 'Relevance Lost,' has certainly...
-
Suppose you buy a $ 7 0 0 , 0 0 0 house with ' no money down' with a 3 0 year, fixed - rate 7 % mortgage paid month starting TODAY! After 3 0 years you've finally paid off your mortgage....YEAH How...
-
Tutorial: BASIC EPS & DILUTED EPS CASE A ABC Berhad has the following at the end of 31 December 2023: - Profit after tax for the year was RM200,000. 500,000 ordinary shares at RMI each - 7.2%,...
-
The students were given the task to obtain 10 g of Cu(OH)2 experimentally. In the laboratory, students had access to a 10% CuSO4 solution and a 20% NaOH solution. Calculate how many ml of CuSO4...
-
Investors were discussing on their investing strategies, argued their philosophies and sharing their stock investing experiences on dated January 31, 2019 as under: Investor First: It is right time...
-
3.588 3.589 3.5885 ep 4 : 3.5888 EXERCISE - 1.3 Visualise 2.874 on the number line, using successive magnification. Visualilse 5.28 on the number line, upto 3 decimal places. OPERATIONS ON REAL...
-
Write a while loop that uses an explicit iterator to accomplish the same thing as Exercise 7.3. Exercise 7.3. Write a for-each loop that calls the addInterest method on each BankAccount object in a...
-
HR Industries (HRI) has a beta of 1.8, while LR Industries (LRI) beta is 0.6. The risk-free rate is 6%, and the required rate of return on an average stock is 13%. The expected rate of inflation...
-
Assume that you have just been hired as a financial analyst by Tropical Sweets Inc., a mid-sized California company that specializes in creating exotic candies from tropical fruits such as mangoes,...
-
If most investors expect the same cash flows from Companies A and B but are more confident that A`s cash flows will be closer to their expected value, which company should have the higher stock...
-
Test the overall significance of a regression model and identify the components of this test from your computer output.
-
Identify the sample.
-
Based on the strategy, what type of sampling technique will be used to identify the sample? a. Why did you choose this type of technique?
Study smarter with the SolutionInn App