Mako Industries is considering changes in its working capital policies to improve its cash flow cycle. Mako's sales last year were $6.0 million (all on credit), and its net profit margin was 8%. Its...


Mako Industries is considering changes in its working capital policies to improve<br>its cash flow cycle. Mako's sales last year were $6.0 million (all on credit), and its<br>net profit margin was 8%. Its inventory turnover was 7.0 times during the year,<br>and its DSO was 45 days. Its annual cost of goods sold was $4.20 million. The<br>firm had fixed assets totaling $600,000. Mako's payables deferral period is 30<br>days.<br>Suppose Mako's managers believe the annual inventory turnover can be raised<br>to 8 times without affecting sale or profit margins. What would Mako's ROA<br>have been if the inventory turnover had been 8 for the year?<br>O 25.74%<br>O 21.03%<br>O 24.33%<br>O 26.57%<br>

Extracted text: Mako Industries is considering changes in its working capital policies to improve its cash flow cycle. Mako's sales last year were $6.0 million (all on credit), and its net profit margin was 8%. Its inventory turnover was 7.0 times during the year, and its DSO was 45 days. Its annual cost of goods sold was $4.20 million. The firm had fixed assets totaling $600,000. Mako's payables deferral period is 30 days. Suppose Mako's managers believe the annual inventory turnover can be raised to 8 times without affecting sale or profit margins. What would Mako's ROA have been if the inventory turnover had been 8 for the year? O 25.74% O 21.03% O 24.33% O 26.57%

Jun 06, 2022
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