# Problem 16-12 Working Capital Cash Flow Cycle Strickler Technology is considering changes in its working capital policies to improve its cash flow…

Problem 16-12

Working Capital Cash Flow Cycle

Strickler Technology is considering changes in its working capital policies to improve its cash flow cycle. Strickler’s sales last year were \$110,000 (all on credit), and it earned a net profit of 7%. Its inventory turnover was 6.875 times during the year, and its DSO was 38 days. Its annual cost of goods sold was \$121,745. The firm had fixed assets totaling \$57,000. Strickler’s payables deferral period is 38 days. Assume 365 days in year for your calculations. Do not round intermediate calculations.

1. Calculate Strickler’s cash conversion cycle. Round your answer to two      days
2. Assuming Strickler holds negligible amounts of cash and marketable securities, calculate its total assets turnover. Round your answer to two decimal      x
4. Suppose Strickler’s managers believe that the inventory turnover can be raised to 7 times without affecting sales and cost of goods sold. What would Strickler’s cash conversion cycle have been if the inventory turnover had been 7 for the year? Round your answer to two days
5. What would Strickler’s total assets turnover have been if the inventory turnover had been 7 for the year? Round your answer to two     x
6. What would Strickler’s ROA have been if the inventory turnover had been 7 for the year? Round your answer to two decimal       %

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