Week 3 - Demello Case 27 - Fin 440 Tim Gillespie

Week 3 - Demello Case 27 - Fin 440 Tim Gillespie - days....

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Tim Gillespie FIN 440 Week 3 Demello Case #27 Questions 3 and 6 AR Period = 1.64 Inventory Period = 76.86 AP Period = 30.42 Operating Cycle = 78.50 Cash Conv Cycle = 48.09 6. Is the firm following an aggressive or a conservative financing policy for funding its working capital? 3. How long are the firm’s operating and cash cycles? Using a suitable diagram show the breakdown of the firm’s operating cycle into its relevant components. What do your findings indicate? In reviewing these numbers you can tell that inventory is the major factor in the operating cycle. It is 76.86 days of the operating cycle, while AR is only 1.64
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Unformatted text preview: days. The AP period reduces the Cash Conv Cycle quite a lot which is a good thing. I believe that Superior Outboard Motors is using an aggressive financing policy. The reason I say this is they seem to finance their fixed assets with capital and some of the current assets with short term credit. The company does not seem like it is conservative because they seem to use financing options instead of the capital for everything. AR Period = Inventory Period = AP Period = Operating Cycle = Cash Conv Cycle = 0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00...
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