1) Suppose that LilyMac Photography has annual sales of $223,000, cost of goods
ID: 2782484 • Letter: 1
Question
1)
Suppose that LilyMac Photography has annual sales of $223,000, cost of goods sold of $158,000, average inventories of $6,200, average accounts receivable of $28,400, and an average accounts payable balance of $18,900.
Assuming that all of LilyMac’s sales are on credit, what will be the firm’s cash cycle? (Use 365 days a year. Do not round intermediate calculations and round your final answer to 2 decimal places.)
days
Suppose that LilyMac Photography has annual sales of $223,000, cost of goods sold of $158,000, average inventories of $6,200, average accounts receivable of $28,400, and an average accounts payable balance of $18,900.
Explanation / Answer
inventory days= 365*6200/158,000 = 14.32 days
receivables days= 365*28,400/223,000 = 46.48 days
payables days = 365*18,900/158,000 = 43.66 days
cash cycle = 14.32 + 46.48 - 43.66 = 17.14 days
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