11.5 Evaluate a company's performance with respect to cash
1) Free cash flow is the anticipated amount of cash available from operations after paying for planned financing of stock and paying dividends.
2) The cash conversion cycle depends upon the time it takes to sell merchandise inventory, to collect receivables, and to pay payables.
3) Casey Company has an accounts receivable turnover of 36 days, an inventory turnover of 77 days, and an accounts payable turnover of 40 days. Casey's cash conversion cycle is:
A) 153 days.
B) 81 days.
C) 73 days.
D) 1 day.
E) 135 days.
4) Ryan Industries has an inventory turnover of 112 days, an accounts payable turnover of 73 days, and an accounts receivable turnover of 82 days. Ryan's cash conversion cycle is:
A) 121 days.
B) 103 days.
C) 43 days.
D) 9 days.
E) 112 days.
5) What is the formula for free cash flow?
6) What is the formula for inventory turnover in days?
7) Assume that Xavier Industries has an inventory turnover of 46 days, an accounts receivable turnover of 28 days, and an accounts payable turnover of 34 days. What is the cash conversion cycle for Xavier Industries? If the average cash conversion cycle for the industry is 45 days, is Xavier healthier or facing a pending cash flow "crunch" when compared to the industry average?
8) What is the cash conversion cycle?