Scenario 1 Scenario 2
Revenues 1,279,312 1,672,090
Cost of goods sold 590,653 580,653
Discount rate 0.062 0.062
Days inventory held 14 12
Days sales outstanding 20 10
Days payable outstanding 10 16
1. What are the operating cycles for Scenarios 1 and 2?
2. What are the cash conversion cycles for Scenarios 1 and 2?
3. What is the denominator in the formula you will use to find the present value of the cost
of goods sold for each scenario? All denominators must be rounded to three decimal
places.
4. Find the present value of the cost of goods sold for each scenario.
5. What is the denominator in the formula you will use to find the present value of the sales
for each scenario? All denominators must be rounded to three decimal places.
6. Find the present value of sales for each scenario.
7. Find the gross profit for each scenario.