Cash Conversion Cycle and Risk Analysis

Contents
ANSWER A.........................................................................................................................................2
ANSWER B.........................................................................................................................................2
ANSWER C.........................................................................................................................................3
PART 1.................................................................................................................................................3
PART (I)...........................................................................................................................................3
PART (II)..........................................................................................................................................3
PART (III).........................................................................................................................................3
PART2..................................................................................................................................................3
PART (I)...........................................................................................................................................3
PART (II)..........................................................................................................................................3
PART (III).........................................................................................................................................4
PART (IV)........................................................................................................................................4
PART(V)...........................................................................................................................................4

ANSWER A
The computation of cash conversion cycle is based on three
aspects which are here in below:
1. Inventory Turnover Ratio
2. Receivable Turnover Ratio
3. Payable Turnover ratio
All the above ratio are to be computed on basis of number of
days.The formula for the computation of Cash Conversion
Cycle=Inventory Turnover Ratio(in days)+Receivable
Turnover Ratio-Payable Turnover Ratio (All figures in
days) (My Accounting Course.com, 2019)
On the basis of computation it is found that the Cash
Conversion Cycle of the company is negative which
implies that the company is managing its working
capital very properly .The comutation for the same has
been presented below:
Sl NO Particul
ars
Receiva
ble
Turnov
er Ratio
(In
days)
Payable
Turnov
er Ratio
(In
days)
Invento
ry
Turnov
er Ratio
(In
days)
Cash
Convers
ion
Cycle in
Days
1 2018 58 112 10 -44
2 2017 67 104 9 -27
So it can be concluded that the company is managing its
business well compared to other company within the same
industry.
ANSWER B
The various risk which have been identified in the annual report
are described here in below:

1) Systematic Market Risk:This is a type of risk which arises
due to uncertainty which pertains in market
example:demand for goods,customer needs.
2) Systematic Technological Risk: The change in technology
3) Unsystematic Supply chain Risk: This is a type of risk in
which dependency on middlemen is more involved
4) Systematic Foreign Exchange Fluctuation Risk: Risk
related to fluctuation in currency.
5) Systematic Interest Rate Risk: Change in the yield of
bonds.
ANSWER C
PART 1
PART (I)
The share has outperform the market as it is showing an
upward return compared to other market indices like standard
and poor 500 Index,standard and poor Information Technology
Index and Dow Jones U.S Technology Super Sector Index.
PART (II)
The company debt has considerably been increased from the
past year as can been from the financials of the company.The
percentage increase in debt is considerably more as compared
to the percentage increase in total assets of the company.
PART (III)
If no interest payment to be paid at the end of the year
2020 ,the price of the bond shall be $995.24.If there is a
payment of interest at the end of year than the price of bond
shall be $1040.24.
PART2
Analysis of Net Present Value:
PART (I)
The cost incurred for the purpose of acquisition of land has not
been considered for the purpose of decision making purpose.As
the land cost has already been incurred and if the project is not