- Question 9 20 Marks A Ben Johnson Has Just Been Appointed As The Chief Financial Officer Of A Mid Sized Manufacturing 1 (90.54 KiB) Viewed 73 times
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Question 9 (20 marks) A Ben Johnson has just been appointed as the chief financial officer of a mid-sized manufacturing company and is keen to measure the firm's cash conversion cycle, operating cycle, production cycle, collection cycle, and payment cycle, to see if any changes are warranted. He collects the necessary information for the most recent fiscal year and puts together the following table: Item Inventory Accounts Receivable Accounts Payable Net Sales Cost of Goods Sold Beginning Ending 60,000 36,000 48,000 60,000 42,000 36,000 144,000 96,000 I. Calculate the Operating cycle and the Cash cycle. [15 Marks] II. Would a firm like to have a short or a long cash cycle? How can it be achieved? [5 Marks] Assume there are 365 days in a year. Show your working clearly and provide your answer to 2 decimal places.