Question

In: Finance

A company has inventory balance of $24,318, accounts receivable of $9,637, and accounts payable of $14,365....

A company has inventory balance of $24,318, accounts receivable of $9,637, and accounts payable of $14,365. If the credit sales are $183,030 and cost of goods sold are $128,952, what is the company's cash (conversion) cycle in number of days? (Use ending balances and assume 365 days in a year.)

A) 36.59

B) 37.61

C) 38.63

D) 39.64

E) 40.66

Solutions

Expert Solution

Cash conversion cycle= DIO +
(Days inventory outstanding)		 DSO -
(Days Sales outstanding)		 DPO
(Days payables outstanding)
Cash conversion cycle= (Inventory * 365/Cost of goods sold) + (Account receivable * 365/Revenue) - (Accounts payable * 365/Cost of goods sold)
Sale $              183,030
Cost of goods sold $              128,952
Inventories $                24,318
Account receivable $                  9,637
Account payable $                14,365
Cash conversion cycle= =(24318 * 365/128952) + =(9637 * 365/183030) - =(14365 * 365/128952)
Cash conversion cycle=                      68.83 +                    19.22 -                    40.66
Cash conversion cycle=                      47.39

jeff jeffy answered 2 years ago
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