3. The Greck Connection had sales of $28.7 million and a cost of goods sold of S

Question

3. The Greck Connection had sales of $28.7 million and a cost of goods sold of S11.5 million in 2013 A simplified balance sheet for the firm appears below a. Calculate The Greek Connection's net working capital in 2013 b. Calculale the cash conversion cycle of The Greek Connection in 2013. c. The industry average accounts receivable days is 30 days What would have been the cash conversion cycle for The Greek Connection in 2013 had it met the industry average for accountsevble days? (Hint Use a 365-day year) THE GREEK CONNECTION BALANCE SHEET as of December 31, 2013 s of dollars Liabilities and Equity Assets Cash Accounts receivable Inventory Total current assets Net plant, property, and equipment Total assets 1,552 4,174 1,262 $7,088 $8,500 $15,588 1.443 1,000 1,220 3,663 3,000 $6,663 $8,925 $15,583 s payable s payable Total current liabilities debt liabilities n equity otal liabilities and equity a. Calculate The Greek Connection's net working capital in 2013. The net working capital is 3125 thousand. (Round to the nearest integer) b. Calculate the cash conversion cycle of The Greek Connection in 2013 The cash cornversion cycle is c. The industry average accounts receivable days is 30 days. What would have been the cash conversion cycle tor The Greek Connection in 2013 had it met the industry average for accounts receivable days Had they met the industry average accounts receivable days of 30 days, the CCC would have been days. (Round to one decimal place.) days. (Round to one decimal place)

Explanation / Answer

a. Working capital = current assets - current liabilties = 7088-3663 = 3,425 thousand dollars

b. CCC = DSO + DIO - DPO

DSO = Accounts receivable/ Annual sales * 365 = 4,174,000/28,700,000 * 365 = 53.083 days

DIO = Inventory/COGS * 365 = 1,262,000/11,500,000 * 365 = 40.054 days

DPO = Accounts Payable/COGS * 365 = 1,443,000/11,500,000 * 365 = 45.799 Days

CCC = 53.083 + 40.054 - 45.799 = 47.34 Days

c. CCC would be : 30 +40.054-45.799 = 24.25 Days

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