Following are the financial statements for the Chenhai Manufacturing Corporation for 2018 and 2019. 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 2018 and 2019.

B. Calculate the inventory-to-sale conversion period for Chenhai in both 2018 and 2019.

C. Calculate the purchase-to-payment conversion period for Chenhai in both 2018 and 2019. Also determine the length of the cash conversion cycle for both 2018 and 2019.

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 2020?

F. What type(s) of financial restructuring might Chenhai attempt during 2020?

G. What prevailing conditions (economic, competitive, etc.) might cause you to believe that Chenhai’s situation may be a turnaround opportunity versus a permanent problem?  

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Cash Accounts receivable Inventories Total current assets Fixed assets, net Total assets CHENHAI MANUFACTURING CORPORATION BALANCE SHEETS 2018 2019 $ 50,000 $ 10,000 200,000 250,000 450,000 490,000 700,000 750,000 400,000 $1,100,000 400,000 $1,150,000 Accounts payable Accruals Bank loan Total current liabilities Long-term debt Common stock ($10 par value) Capital surplus Retained earnings Total liabilities and equity 2018 2019 $ 130,000 $ 170,000 50,000 70,000 90,000 330,000 90,000 270,000 300,000 300,000 50,000 180,000 $1,100,000 400,000 300,000 50,000 70,000 $1,150,000