Essay on Ch 22 Mini Case

890 Words Dec 16th, 2012 4 Pages
| Jen Poe | | | | | | | BUS657 Corporate Managerial Finance | | | | | | | | | | | | | Week #5 | | | | | | | Assignment - Chapter 22 Mini - Case | | | | | | | | | | | | | | | | | | | 1) Calculate BB's current cash conversion cycle. | | | | | | | | | | | | | BB's Ratios: | | | | | | | Average Age of Inventory | $842,020 / [(0.57 *$43,803,000) /365] | | 12.31 | days | | Average Collection Period | $3,240,222/($43,803,000/365) | | 27.00 | days | | Average payment Period | $1,826,070/[(0.57*$43,803,000)/365] | | 26.695 | days | | | | | | | | | BB's Cash Conversion Cycle = | AAI + ACP - APP | | | | | | BB's Cash Conversion Cycle = …show more content…
However, it is considering changing the terms to 2/10 net 30 in an attempt to reduce the amount of time it takes to collect its accounts receivable. The firm believes this change alone would decrease the average collection period by five days. BB also expects that 63% of its customers will elect to pay within the discount period and that the increased attractiveness of the terms will increase sales by 1% a year. It is not expected that bad debts will change from the current level of 0% as a

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