Description
Purpose of Assignment
The purpose of this assignment is to help students gain a better understanding of calculations of cash flow and strategies to increase it.
Assignment Steps
Select a multinational company from the following industries:
- Retail
- Pharmaceutical
- Computer Hardware
- Manufacturing
- Automotive
Review the selected company's most recent financial statements.
Calculate the following cash conversion cycle ratios based on the financial statements using Microsoft® Excel®:
- Average inventory
- Inventory turnover rate
- Average account receivable
- Account receivable turnover
- Average collection cycle
Explain in 700 words the importance of the cash conversion cycle, including:
- Discuss the purpose of the cash conversion cycle and its components.
- Analyze the results obtained in the cash conversion cycle equations.
- Propose strategies to increase the cash flows of the company under study.
Format your paper consistent with APA guidelines.
Explanation & Answer
Attached.
average inventory=(beginning inventory +ending inventory)/2
beginning inventory
$ 89,464,000.00
ending inventory
$ 143,553,000.00
average inventory
$ 116,508,500.00
inventory turnover rate=cost of goods sold/average stock
cost of goods sold
$ 1,940,706,000.00
average stock
$ 116,508,500.00
invetory turnover rate
16.65720527
average accounts receivable=(beginning accounts receivable + ending accounts receivable)/2
beginning accounts receivable
$ 236,620,000.00
ending accounts receivable
$ 364,574,000.00
average accounts receivable
$ 300,597,000.00
account receivable turnover=net credit sales/average accounts receivable
net credit sales
$ 3,156,428,000.00
average acccounts receivable
$ 300,597,000.00
account receivable turnover
10.50053061
average collection cycle=365 days/accounts receivable turnover ratio
accounts receivable turnover ratio
10.5
average collection cycle
34.7619
Running head: CASH CONVERSION CYCLE
Cash Conversion Cycle
Coca-Cola Bottling Co. Consolidated (COKE
Name
Instructor
Institutional Affiliation
Date
CASH CONVERSION CYCLE
2
Purpose of the cash conversion cycle and its components
Cash conversion cycle is a finance concept that provides a metric commonly used in...