Overview
I’m studying and need help with a Calculus question to help me learn.
Question 1:
a. Would you expect Alothaim Market, which sells food, or Panda Market, which sells a wide range of household goods at attractive prices, to have the higher cash conversion cycle? Why?
b. Use the following data to calculate the cash conversion cycle of each firm (all values are in millions of dollars). What factor has the greatest impact on the difference in their conversion cycles?
Alothaim Market
Panda Market
Sales
4,890
20,000
Cost of good sold
2.600
8000
Inventories
3,400
2000
Accounts receivable
250
670
Account payable
350
1000
Question 2:
Recall that in2018 Executive Fruit ended the year with $1,000,000 of fixed assets and net working capital, and it had $3,000,000 of sales. In other words, each dollar of sales required $.70 of net assets. The company forecasts that sales in 2019 will increase by $300,000. Therefore, if the ratio of net assets to sales remains constant, assets in 2019 will need to rise by $.70 of this increase can be financed by reinvested earnings, which in 2019 are $40,000. So the amount of external financing needed is
Question 3:
What are some of the motivations for leveraged and management buyouts of the firm?