FIN MGMT 3040 Chapter Six Homework Assignment On pages 224 and 225 of our text, you will find financial statements for Scandi Home Furnishings, Inc 1 For 2015 and 2016, calculate the following (show your math) Days in Inventory Average collection period Days in Accounts Payable (do not include accrued liabilities) Cash Conversion Cycle For each of the four ratios above, include a statement under your calculations explaining specifically what the calculation means Round your answers to include two decimal places 2 From the description in the text, the financial statements, and your calculations, what advice related to cash management would you share with the owners Show critical thinking here more than the obvious Guidelines 12 pt New Times Roman Normal margins Double space for question 2 You can use single space for the first question Do not include the questions, but you must number you answers Assignments will be ranked and graded you are competing with your classmates Limit two pages Include your name in the header Submit on d21 as a word document 224 Part Planning for the Scandi Home Furnishings, Inc (Continued) business At the same time after travelling throughout the world he was sure that he wanted to be an entrepreneur years, ka realized that what he really wanted to do was to start and operate his own Scandinavian home furnishings the United States, Kaj moved to the United States in early 2013 With $140,000 of his personal assets and S210 000 management expertise, was allowed to operate the venture in a way that he thought was best for Scandi Four years from venture investors, he began operations in mid 2013, ka, with a 40 percent ownership interest and industry related fator, Kaj is sure he did the right thing Following are the three years of income statements and balance sheets for Scandi Home Furnishings Kaj felt that he would need to continue to expand sales to maintain a competitive advantage After first concentrating on selling Scan dinavian home furnishings in the Northeast in 2014 and 2015, he decided to enter the West Coast market An increase in expenses occurred associated with identifying contacting and selling to home furnishings retailers in California, Oregon and Washington Kaj Rasmussen hopes that you can help him better understand what has been happening to Scans Home Furnishings from both operating and financial standpoints SCANDI HOME FURNISHINGS, INC 2016 INCOME STATEMENTS 2015 $1 900 000 2014 $1 300 000 790000 520 000 130 000 150 000 20 000 90 Net sales Cost of goods sold Groot proti Manting General and administrative Depreciation EBIT West Earnings before the Income to Net Income Cash Didende $1 500 000 son 500 000 150 000 150 000 53 000 247 000 57 000 190 000 75 000 $ 114 000 $74 300 25000 155 000 52 000 $93 000 S 0 2 000 6 000 3 $ SCANDI HOME FURNISHINGS, INC 2014 2015 BALANCE SHEETS Cash Accounts on Inventores Total current att Fed assets, Total assets $4100 250 000 $ 50 000 200 000 450 000 700 100 200 000 51 000 000 2016 $10 000 350 000 800 000 970000 B60 000 400 000 90 000 Accounts pavable $ 130 000 Anal und 70 000 20 000 Bank loan Total current liabilities 270 Dod Long term debt 3000 200 000 Common stock 350,000 Retained earnings 8000 750 Total abilities and $1 000 $12000 350 000 shares of common stock were rand van Scandi Home Furnishings was incorporated in 2013 150 000 150 000 Chapter 6 Managing Cash Flow 225 Scandi Home Furnishings, Inc (Continued) A An analysis of the cash conversion cycle should also help Kaj understand what has been happening to the operations of Scandi Prepare an analysis of the average conversion periods for the three components of the cash conversion cycle for 2014 2015 and 2015 2016 Explain what has happened in terms of each component of the cycle 8 Kaj has been able to obtain some industry ratio data from the home furnishings industry trade association to which he belongs The industry association collects proprietary financial information from members of the association, compiles averages to protect the proprietary nature of the information, and provides averages for use by individual trade associ ation members Over the 2014 2015 and 2015 2016 periods, the inventory to sale conversion period has averaged 200 days, while the sale to cash conversion period (days of sales outstanding for the industry has averaged 60 days How did Scandi's operations compare with these industry averages in terms of these two components of the cash conversion cycle

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FIN MGMT 3040 Chapter Six Homework Assignment On pages 224 and 225 of our text, you will find financial statements for Scandi Home Furnishings, Inc  1  For 2015 and 2016, calculate the following (show your math)  Days in Inventory Average collection period Days in Accounts Payable (do not include accrued liabilities) Cash Conversion Cycle For each of the four ratios above, include a statement under your calculations explaining specifically what the calculation means  Round your answers to include two decimal places  2  From the description in the text, the financial statements, and your calculations, what advice related to cash management would you share with the owners  Show critical thinking here   more than the obvious  Guidelines  12 pt  New Times Roman Normal margins Double space for question 2  You can use single space for the first question Do not include the questions, but you must number you answers  Assignments will be ranked and graded  you are competing with your classmates  Limit  two pages Include your name in the header  Submit on d21 as a word document  224 Part Planning for the Scandi Home Furnishings, Inc  (Continued) business  At the same time after travelling throughout the world he was sure that he wanted to be an entrepreneur years, ka realized that what he really wanted to do was to start and operate his own Scandinavian home furnishings the United States, Kaj moved to the United States in early 2013  With $140,000 of his personal assets and S210 000 management expertise, was allowed to operate the venture in a way that he thought was best for Scandi  Four years from venture investors, he began operations in mid 2013, ka, with a 40 percent ownership interest and industry related fator, Kaj is sure he did the right thing Following are the three years of income statements and balance sheets for Scandi Home Furnishings  Kaj felt that he would need to continue to expand sales to maintain a competitive advantage  After first concentrating on selling Scan dinavian home furnishings in the Northeast in 2014 and 2015, he decided to enter the West Coast market  An increase in expenses occurred associated with identifying contacting and selling to home furnishings retailers in California, Oregon and Washington  Kaj Rasmussen hopes that you can help him better understand what has been happening to Scans Home Furnishings from both operating and financial standpoints  SCANDI HOME FURNISHINGS, INC 2016 INCOME STATEMENTS 2015 $1 900 000 2014 $1 300 000 790000 520 000 130 000 150 000 20 000 90 Net sales Cost of goods sold Groot proti Manting General and administrative Depreciation EBIT West Earnings before the Income to Net Income Cash Didende $1 500 000 son 500 000 150 000 150 000 53 000 247 000 57 000 190 000 75 000 $ 114 000 $74 300 25000 155 000 52 000 $93 000 S 0 2 000 6 000 3 $ SCANDI HOME FURNISHINGS, INC  2014 2015 BALANCE SHEETS Cash Accounts on Inventores Total current att Fed assets, Total assets $4100 250 000 $ 50 000 200 000 450 000 700 100 200 000 51 000 000 2016 $10 000 350 000 800 000 970000 B60 000 400 000 90 000 Accounts pavable $ 130 000 Anal und 70 000 20 000 Bank loan Total current liabilities 270 Dod Long term debt 3000 200 000 Common stock 350,000 Retained earnings 8000 750 Total abilities and $1 000 $12000  350 000 shares of common stock were rand van Scandi Home Furnishings was incorporated in 2013 150 000 150 000 Chapter 6  Managing Cash Flow 225 Scandi Home Furnishings, Inc  (Continued) A  An analysis of the cash conversion cycle should also help Kaj understand what has been happening to the operations of Scandi  Prepare an analysis of the average conversion periods for the three components of the cash conversion cycle for 2014 2015 and 2015 2016  Explain what has happened in terms of each component of the cycle 8  Kaj has been able to obtain some industry ratio data from the home furnishings industry trade association to which he belongs  The industry association collects proprietary financial information from members of the association, compiles averages to protect the proprietary nature of the information, and provides averages for use by individual trade associ ation members  Over the 2014 2015 and 2015 2016 periods, the inventory to sale conversion period has averaged 200 days, while the sale to cash conversion period (days of sales outstanding for the industry has averaged 60 days  How did Scandi's operations compare with these industry averages in terms of these two components of the cash conversion cycle

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Question: FIN/MGMT 3040 Chapter Six Homework Assignment On pages 224 and 225 of our text, you will find financial statements for Scandi Home Furnishings, Inc. 1.

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