A firm has sales of $120m and average account receivable balance of $25 million. (a)...
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A firm has sales of $120m and average account receivable balance of $25 million. (a) What is the firms Days Sales Outstanding (DSO) based on 365 days per year? (b) Is the firms DSO performing better or worse than the peer average of 65 days? (c) if the CFO wants to generate $1 million in additional cash by doing a better collection job, how many days should he eliminate from the current level of DSO (round to the nearest whole day)?
A firm has Cost of Goods Sold (COGS) equal to $230 million and average Inventory of $180 million. (a) What is the firms Inventory Turnover (ITO)? (b) If its peers have an average ITO equal to 1.50, is this firms performance Better, Worse, or Similar to its peers? (c) Recommend one way in which the firm can improve its ITO.
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