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

question 55

Essay

Adong's Fishing Products is analyzing the performance of its cash management. On average, the firm holds inventory 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 negotiated 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:

Organization

An arranged and structured collective of people with a particular purpose, such as a business or government department.

Public Service Motivation

The inclination or desire to contribute to the well-being of society through work in the public sector or through voluntary service.

Goal Theories

Theories that focus on how setting goals influences behavior and outcomes.

Temporal Motivation Theory

Temporal Motivation Theory is a model that explains motivation in terms of time, focusing on how time influences the prioritization and pursuit of goals.