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Unformatted text preview: FIN 504 - Finance Principals Gerald McGill Grand Canyon University Module Six - Working Capital and Financial Forecasting P14-3 Garret Industries turns over its inventory 6 times each year; it has an average collection period of 45 days and an The firms annual sales are $3 million. Assume there is no difference in the investment per dollar of sales in inven A) Calculate the firm’s cash conversion cycle, its daily cash operating expenditure, and the amount of resources nee A) Operating Cycle (OC) = Average Age of Inventory (AAI) + Average Collection Period (ACP) Operating Cycle (OC) = 60.8333333 + 45 = 105.83333 Cash Conversion Cycle (CCC) = Operating Cycle (OC) - Average Payment Period (APP) Cash Conversion Cycle (CCC) = 105.833333 - 30 = 75.83333 Daily Cash Operating Expenditure P14-6 Alexis Company uses 800 units of a product per year on a continuous basis. The product has a fixed cost of $50 per unit per year. It takes 5 days to receive a shipment after an order is placed, and the firm wishes to hold 10 daper unit per year....
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- Spring '11