Analysis of Cash Conversion Cycle, Profit, Break Even Point and Cost of Production

Question 1
Cash Conversion cycle has been presented here-in-below:
Cash Conversion Cycle
Sl
No Particulars
2017 (Anon.,
2017)
201
6
2015 (Anon.,
2015)
201
4
2013 (Anon.,
2013)
1
Inventory Turnover
Period 58.36
60.5
7 59.95
60.0
5 63.34
2
Debtors Turnover
period 32.03
30.7
1 31.41
36.1
5 43.46
3
Creditors Turnover
Period 40.99
39.3
2 40.20
46.1
6 55.38
4 Cash Conversion Cycle 49.40
51.9
6 51.16
50.0
4 51.42
Note: Since data of purchase is not available, cost of sales have been taken into
consideration.
Further, on analysis of Cash flow statement of past 2 years on may observe that cash flow
from operating activity has shown an uptrend and has increased roughly by 5 Mio. Also, the
same has been mainly on account of increase in receipt from customer. There has also been a
significant increase in payment of expenses to employees. Further, one may also observe that
cash and cash equivalent has increased.
Question 2
On analysis of the proposed suggestion given be respected personnel of the organisation, the
following working has been obtained:
Profit point of view
Present Scenario
Sl no Particulars Per unit Amount
1 Sales 5000
2 Selling Price 420
3 Variable Cost 144
4 Contribution 276
5 Contribution whole 1380000
6 Fixed Manufacturing Cost 460000
7 Variable Selling and Administrative Cost 180000
8 Fixed Selling and Administrative Cost 500000
9 Profit 240000
Suggestion 1

Sl no Particulars Per unit Amount
1 Sales 6500
2 Selling Price 420
3 Variable Cost 172
4 Contribution 248
5 Contribution whole 1612000
6 Fixed Manufacturing Cost 460000
7 Variable Selling and Administrative Cost 234000
8 Fixed Selling and Administrative Cost 530000
9 Profit 388000
Suggestion 2
Sl no Particulars Per unit Amount
1 Sales 4500
2 Selling Price 480
3 Variable Cost 144
4 Contribution 336
5 Contribution whole 1512000
6 Fixed Manufacturing Cost 460000
7 Variable Selling and Administrative Cost 162000
8 Fixed Selling and Administrative Cost 550000
9 Profit 340000
Suggestion 3
Sl no Particulars Per unit Amount
1 Sales 6000
2 Selling Price 420/390
3 Variable Cost 144
4 Contribution 276/246
5 Contribution whole 1611000
6 Fixed Manufacturing Cost 460000
7 Variable Selling and Administrative Cost 216000
8 Fixed Selling and Administrative Cost 560000
9 Profit 375000
On the profit profit if one consider the best suggestion which maximises the profit of the
group shall be suggestion 1 under which the profit has been maximised.
Break even point of view
Present Scenario

Sl no Particulars Per unit Amount
1 Sales 5000
2 Selling Price 420
3 Variable Cost 144
4 Contribution 276
5 Variable Selling and Administrative Cost 36
6 Net Variable 240
7 Fixed Manufacturing Cost 460000
8 Fixed Selling and Administrative Cost 500000
9 Break even quantity 4000
Suggestion 1
Sl no Particulars Per unit Amount
1 Sales 6500
2 Selling Price 420
3 Variable Cost 172
4 Contribution 248
5 Variable Selling and Administrative Cost 36
6 Net Variable 212
7 Fixed Manufacturing Cost 460000
8 Fixed Selling and Administrative Cost 530000
9 Break even quantity 4670
Suggestion 2
Sl no Particulars Per unit Amount
1 Sales 4500
2 Selling Price 480
3 Variable Cost 144
4 Contribution 336
5 Variable Selling and Administrative Cost 36
6 Net Variable 300
7 Fixed Manufacturing Cost 460000
8 Fixed Selling and Administrative Cost 550000
9 Break even quantity 3367
Suggestion 3
Sl no Particulars Per unit Amount
1 Sales 6000