Cash conversion cycle company had an inventory conversion period of 68 days an a

Question

Cash conversion cycle company had an inventory conversion period of 68 days an average collection period of 37 days and deferral period of 25 days. Assume the cost of goods is 80% of sales. Assume 365 days in year for your calculations. What is the length of firms cash conversion cycle? If sales are $3,637,275 and all sales are on credit what is the firms investment in accounts receivable? How many times per year does company turn over its inventory? Cash conversion cycle company had an inventory conversion period of 68 days an average collection period of 37 days and deferral period of 25 days. Assume the cost of goods is 80% of sales. Assume 365 days in year for your calculations. What is the length of firms cash conversion cycle? If sales are $3,637,275 and all sales are on credit what is the firms investment in accounts receivable? How many times per year does company turn over its inventory?

Explanation / Answer

Cash Conversion cycle= Days inventory outstanding+Days Sales Outstanding+Days payables outstanding Cash Conversion cycle= 130 Inventory Turnover 365/Days inventory Outstanding 5.4 Days Sales outstanding= account recivable*365/net credit sales Account recivable days sales outstanding*net credit sales/365 $                                                                                                                                               368,710.07

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