Lovelace's Tire Express (LTE) is adopting the necessary short-term financial management practices to shorten the CCC....

 

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Lovelace's Tire Express (LTE) is adopting the necessary short-term financial management practices to shorten the CCC. In the most recent year, LTE reported the following financial values: revenues of Ss,000,000, CGS of $2,500,000, SG&A expenses of S500,00o, depreciation expense of $250,000, and interest expense of $300,000. LTE has a tax rate of 2s percent, 1,000,0o0 common shares outstanding, and a credit line with an interest rate priced at 8 percent. Use this information and the values below to calculate the change in share price that would accrue to LTE after shortening the CCC. The industry average PE multiple is zoX. Current DIH =75 days | Benchmark DIH=25 days Current DSO = 45 days | Benchmiark DSO =20 days Current DPO = 3o days | Benchmark DPO = 45 days Lovelace's Tire Express (LTE) is adopting the necessary short-term financial management practices to shorten the CCC. In the most recent year, LTE reported the following financial values: revenues of Ss,000,000, CGS of $2,500,000, SG&A expenses of S500,00o, depreciation expense of $250,000, and interest expense of $300,000. LTE has a tax rate of 2s percent, 1,000,0o0 common shares outstanding, and a credit line with an interest rate priced at 8 percent. Use this information and the values below to calculate the change in share price that would accrue to LTE after shortening the CCC. The industry average PE multiple is zoX. Current DIH =75 days | Benchmark DIH=25 days Current DSO = 45 days | Benchmiark DSO =20 days Current DPO = 3o days | Benchmark DPO = 45 days

Answer rating: 100% (QA)

The share price would increase from 2175 to 2249 after shortening the CCC This is a 34 inc... View the full answer