Canadian Bacon Inc. financial statements are presented in the table below. Based

Question

Canadian Bacon Inc. financial statements are presented in the table below.

Based on the information in the table, and using a 365-day year, calculate cash conversion cycle.

Round the answers to two decimal places

Balance Sheet December 31, 2014

Income Statement, Year of 2014

Cash and marketable securities $132,000 Accounts payable $399,000 Accounts receivable $311,000 Notes payable $98,500 Inventories $512,000 Accrued expenses $89,300 Prepaid expenses $11,300 Total current liabilities $586,800 Total current assets $966,300 Long-term debt $799,400 Gross fixed assets $2,104,000 Par value and paid-in-capital $298,000 Less: accumulated depreciation $398,000 Retained Earnings $988,100 Net fixed assets $1,706,000 Common Equity 1,286,100 Total assets $2,672,300 Total liabilities and owner’s equity $2,672,300

Explanation / Answer

Option D is correct

High inventory turnover is inventory is quickly converted into sales and hence they have to keep inventory for a very less period of time. Since inventory is kept for a short period of time, firm has to invest less amount of money in inventory. Therefore, a firm with a high inventory turnover is efficient. a

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