Look back in the chapter to Table 14.1, which showed the balance sheets for Unilate Textiles on three different dates. Assume all sales and all purchases are made on credit. Calculate the length of Unilate’s cash conversion cycle on September 30, 2019 and December 31, 2019.

Table 14.1

 

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Table 14.1 Unilate Textiles: Historical and Projected Financials ($ million) 9/30/19 Projected 1. Balance Sheets Cash and equivalents Accounts receivable Inventories Total current assets (CA) Net plant and equipment Total Assets Accounts payable Accruals Notes payable Total current liabilities (CL) Long-term bonds Total liabilities Common stock (25 million shares) Retained earnings Total common (owners') equity Total Liabilities and Equity Net working capital = CA - CL Current ratio = CA/CL II. Partial Income Statements Sales Cost of goods sold Fixed costs Earnings before interest and taxes *Rounding difference. 12/31/18 Historical $15.0 180.0 270.0 $465.0 380.0 $845.0 $ 30.0 60.0 40.0 $130.0 300.0 $430.0 130.0 285.0 $415.0 $845.0 $335.0 3.6X 2018 $1,500.0 (1,230.0) ( 140.0) $ 130.0 $ 30.0 251.5 410.0 $ 691.5 408.5 $ 1,100.0 $ 90.0 100.0 129.0 $ 319.0 309.0 $ 628.0 159.3 312.7 $ 472.0 $ 1,100.0 $ 372.5 2.2X 12/31/19 Projected $ 16.5 198.0 297.0 $511.5 418.0 $929.5 $ 33.0 66.0 46.8 $ 145.8 309.0 $454.8 159.3 315.5 $474.8 $929.5* $365.7 3.6X 2019 $1,650.0 (1,353.0) (154.0) $ 143.0