The following information relates to a company that you are considering investing in. The company has...

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The following information relates to a company that you are considering investing in. The company has the following ratios: Current ratio- .90 Inventory to Sales Conversion Period - 160 days Sales to Cash Conversion Period - 55 days Purchases to Payments Conversion Period - 14 days The accountant also reports that the gross profit margin is 18% and the next profit margin is 5%. Now you are being provided with this additional information on the company. The company also has a bank line of credit that allows the company to borrow any shortfall it might have in cash. Interest on the loan is 10%. Assume the loan remains constant throughout the year. The company likes to keep no less than $25,000 in its bank account. Assume that outstanding accounts payable are all related to inventory purchases. The company has $1,200,000 of equity and $140,000 in retained earnings at the end of the year. Sales in the most recent year were $2,600,000. Ignore income tax for purposes of this problem. Build a balance sheet and income statement financial model. What is the company's return on investment? Bonus Points: What changes can managing make that will have the greatest impact on ROI? The following information relates to a company that you are considering investing in. The company has the following ratios: Current ratio- .90 Inventory to Sales Conversion Period - 160 days Sales to Cash Conversion Period - 55 days Purchases to Payments Conversion Period - 14 days The accountant also reports that the gross profit margin is 18% and the next profit margin is 5%. Now you are being provided with this additional information on the company. The company also has a bank line of credit that allows the company to borrow any shortfall it might have in cash. Interest on the loan is 10%. Assume the loan remains constant throughout the year. The company likes to keep no less than $25,000 in its bank account. Assume that outstanding accounts payable are all related to inventory purchases. The company has $1,200,000 of equity and $140,000 in retained earnings at the end of the year. Sales in the most recent year were $2,600,000. Ignore income tax for purposes of this problem. Build a balance sheet and income statement financial model. What is the company's return on investment? Bonus Points: What changes can managing make that will have the greatest impact on ROI?

Answer rating: 100% (QA)

To build a balance sheet and income statement financial model well start with the given information and calculate the necessary components Balance Sheet Assets Cash This will be the minimum of 25000 o... View the full answer