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The American Flag Corporation (AFC) wants to determine the effect of its inventory turnover and days sales outstanding (DSO) on its cash flow cycle. Last year, AFC's sales (all on credit) were $468,000, and it had a net profit margin of 8 percent. The cost of goods sold is 60 percent of sales. Inventory was turned over 12 times during the year, and the DSO was 42 days. The firm had negligible amounts of cash and marketable securities, and it's fixed assets were $150,000. AFC's payables deferral period is 35 days. (a) find out AFC's cash conversion cycle. (b) find out AFC's total assets turnover and return on assets (ROA).

Basic Finance, Finance

  • Category:- Basic Finance
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