Your consulting firm was recently hired to improve the performance of Shin-Soene

Question

Your consulting firm was recently hired to improve the performance of Shin-Soenen Inc, which is highly profitable but has been experiencing cash shortages due to its high growth rate. As one part of your analysis, you want to determine the firm's cash conversion cycle. Using the following information and a 365-day year, what is the firm's present cash conversion cycle?

Average inventory = $75,000
Annual sales = $600,000
Annual cost of goods sold = $360,000
Average accounts receivable = $160,000
Average accounts payable = $25,000

Explanation / Answer

cash conversion cycle = 75000/360000/365 + 160000/600000/365 - 25000/600000/365 =

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