- Premium Academic Help From Professionals
- +1 757 528 8682
- support@standardwriter.com
Calculating Cash Conversion statement
Calculating Cash Conversion statement
|
Order Number |
0989877776 |
|
Type of Project |
ESSAY |
|
Writer Level |
PHD VERIFIED |
|
Format |
APA |
|
Academic Sources |
10 |
|
Page Count |
3-12 PAGES |
Instructions/Descriptions
Calculating Cash Conversion statement
Question Description
Calculate the Cash Conversion Cycle (CCC) for each of the two companies in 2019 and 2020. Using your answer, analyze the efficiency of each of the two companies in managing their working capital in 2020 as compared to 2019. Note: Ensure that you analyze this question, not just describe the CCC values. (3 marks)
| AUSTAL 2019 | AUSTAL 2020 | SYNLAIT MILK 2019 | SYNLAIT MILK 2020 | |
| INVENTORIES | 167,042,000 | 143,799,000 | 157,765,336 | 250,310,351 |
| COST OF GOODS SOLD | 1,661,113,000 | 1,846,707,000 | 778,722,364 | 984,427,613 |
| ACOGS | 4,550,994.52 | 5,059,471.23 | 2,133,485.93 | 2,697,061.95 |
| RECEIVABLES | 225,268,000 | 144,217,000 | 59,271,700 | 58,592,269 |
| SALES | 1,851,021,000 | 2,086,001,000 | 980,289,979 | 1,209,835,532 |
| AVG DAILY SALES | 5,071,290.41 | 5,715,071.23 | 2,685,725.97 | 3,314,617.90 |
| PAYABLES | 202,308,000 | 156,910,000 | 206,737,486 | 221,863,965 |
| INVENTORY DAYS | 36.70450475 | 28.42174476 | 73.94721187 | 92.80852844 |
| ACCOUNTS RECEIVABLE DAYS | 44.42025239 | 25.23450612 | 22.06915399 | 17.67693014 |
| ACCOUNTS PAYABLE DAYS | 44.45358022 | 31.01312228 | 96.9012653 | 82.26135285 |
| CCC | 36.67117692 | 22.6431286 | -0.88489944 | 28.22410573 |
Austral
Holding less inventory in 2020 compared to 2019, therefore, decreasing the cash conversion cycle
COGS have increased from $1,661,113,000 to $1,846,707,000 , however, the inventory has decreased from $167,042,000 to $143,799,000 meaning that they’ve been managing their inventory somewhat well enough to decrease their inventory days. In addition, increasing their productivity evident by the increase of COGS
The payables have also decreased meaning that they have been able to pay off some of their creditors
Austral has been able to receive their money from buyers evident in their receivable values
SYNLAIT MILK
Synlait Milk has a negative CCC in 2019 meaning that the company received cash from its sales before it paid its suppliers for the products it sold.
However, in 2020, while the Avg daily COGS increased from 157,765,336 in 2019, the inventories and accounts receivables increased as well. They weren’t able to manage their inventories as well which might have resulted in a higher CCC in 2019
Accounts payable days reduced from 96.9 days in 2019 to 82.26 days in 2019 which might suggest it is not taking full advantage of opportunities to delay payment to suppliers.
QUESTION 2: Analyse the sources of finance for each of the two companies in 2020 as compared to 2019. Use two capital structure ratios to support your answer and provide an explanation regarding the changes in the composition of the sources of finance for each enterprise. Note: Ensure that you analyze this question, not just describe the ratio values. (2 marks)
QUESTION 3: Analyse the ability of management to manage their fixed assets and total assets for each of the two companies in 2020 as compared to 2019. Use two Asset Management efficiency ratios to support your answer and explain any change in each companies’ ability to use their assets to generate sales. Note: ensure that you analyse in this question, not just describe the ratio values. (2 marks)[Order Now]
QUESTION 4: Analyse the profitability of invested capital (assets) for each of the two companies in 2020 as compared to 2019. Based on your calculations, explain the main reason(s) for the change in the profitability for each company over the two years. Note: ensure that you analyse in this question, not just describe the ratio values. (3 marks)
Calculating Cash Conversion statement
