Adong's Fishing Products Is Analyzing the Performance of Its Cash

question 240

Essay

Adong's Fishing Products is analyzing the performance of its cash management. On average, the firm holds inventory for 65 days, pays its suppliers in 35 days, and collects its receivables in 15 days. The firm has a current annual outlay of $1,960,000 on operating cycle investments. Adong currently pays 10 percent for its financing. (Assume a 360-day year.)
(a) Calculate the firm's cash conversion cycle.
(b) Calculate the firm's operating cycle.
(c) Calculate the daily expenditure and the firm's annual savings if the operating cycle is reduced by 15 days.

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Definitions:

Factitious Disorder

A psychological disorder characterized by the deliberate fabrication of symptoms or self-infliction of injury in order to assume the sick role without external incentives.

Munchausen Syndrome

Munchausen Syndrome is a psychiatric disorder wherein individuals purposely feign disease, illness, or psychological trauma to draw attention, sympathy, or reassurance to themselves.

Somatic Symptom Disorder

A mental disorder characterized by an excessive focus on physical symptoms, such as pain or fatigue, that causes major emotional distress and difficulties in functioning.

Factitious Disorder

A mental disorder in which a person acts as if they have a physical or mental illness when they are not really sick, to assume the sick role and gain medical attention.