For 2019, perform an analysis of productivity based on the following working capital components: AR, Inventory, and
Question:
For 2019, perform an analysis of productivity based on the following working capital components: AR, Inventory, and AP. Calculate their turnover, and the corresponding DSO, DIO, and DPO (we covered this in the first part of this project). Calculate the cash conversion cycle. Provide all the calculations.
Provide all the calculations.
DSO = 365 / Net Sales * Average Accounts Receivable = 31.8 days
DIO = 365 / (Cost of Goods Sold / Average Inventories) = 141.6 days
DPO = 365 / (Cost of Goods Sold / Average accounts Payable) 100.8 days
CCC = DSO + DIO - DPO = 72.6 days
Based on the calculations in the previous question, provide your comments regarding SBD’s productivity. How good is SBD managing this productivity component of ROE? Is SBD’s CCC appropriate with respect to its competitors? (it is fine if you only compare with Snap-On)? What about its industry?
Expert Answer:
SBDs productivity is good based on the calculations in the previous question It is managing this pro... View the full answer
