# Answer to Question #24016 in Finance for Nancy Day

Question #24016

I am so lost in all of this. can somone help me? b. What will be the impact on its net investment in working capital in 2012 if Robinson is able to reduce its collection

period by five days, its inventory period by six days, and increase its payment period by two days?

New Sales

Sales/day

New COGS

COGS/day

Estimated AR if reduced by 5 days

Old collection period 93.58

New collection period 88.58

New AR estimate 5

Estimated Inventory if conversion period reduced by 6 days

COGS/day

Old conversion period

New conversion period

New inventory estimate

Estimated AP if payment period increased by 2 days

COGS/day

Old payment period

New payment period

New AP estimate

2012 working capital

Did the working capital increase or decrease from part a?

Robinson expects its 2012 sales and cost of goods sold to grow by 20 percent over their 2011 levels.

a. What will be the affect on its levels of receivables, inventories, and payments if the components of its cash conversion

cycle remain at their 2011 levels? What will be its net investment in working capital?

Receivables

Inventories

Payments

Net investment in working capital

New Sales

Sales/day

New COGS

COGS/day

b. What will be the impact on its net investment in working capital in 2012 if Robinson is able to reduce its inventory

period by ten days?

Estimated AR if reduced by 0 days

Sales/day

Old collection period

New collection period

New AR estimate

Estimated Inventory if conversion period reduced by 10 days

COGS/day

Old conversion period

New conversion period

New inventory estimate

Estimated AP if payment period increased by 0 days

COGS/day

Old payment period

New payment period

New AP estimate

2012 working capital

Did the working capital increase or decrease from part a?

period by five days, its inventory period by six days, and increase its payment period by two days?

New Sales

Sales/day

New COGS

COGS/day

Estimated AR if reduced by 5 days

Old collection period 93.58

New collection period 88.58

New AR estimate 5

Estimated Inventory if conversion period reduced by 6 days

COGS/day

Old conversion period

New conversion period

New inventory estimate

Estimated AP if payment period increased by 2 days

COGS/day

Old payment period

New payment period

New AP estimate

2012 working capital

Did the working capital increase or decrease from part a?

Robinson expects its 2012 sales and cost of goods sold to grow by 20 percent over their 2011 levels.

a. What will be the affect on its levels of receivables, inventories, and payments if the components of its cash conversion

cycle remain at their 2011 levels? What will be its net investment in working capital?

Receivables

Inventories

Payments

Net investment in working capital

New Sales

Sales/day

New COGS

COGS/day

b. What will be the impact on its net investment in working capital in 2012 if Robinson is able to reduce its inventory

period by ten days?

Estimated AR if reduced by 0 days

Sales/day

Old collection period

New collection period

New AR estimate

Estimated Inventory if conversion period reduced by 10 days

COGS/day

Old conversion period

New conversion period

New inventory estimate

Estimated AP if payment period increased by 0 days

COGS/day

Old payment period

New payment period

New AP estimate

2012 working capital

Did the working capital increase or decrease from part a?

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