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A company has inventory balance of $24,935, accounts receivable of $9,902, and accounts payable of $14,652....

A company has inventory balance of $24,935, accounts receivable of $9,902, and accounts payable of $14,652. If the credit sales are $186,978 and cost of goods sold are $132,477, what is the company's cash (conversion) cycle in number of days? (Use ending balances and assume 365 days in a year.)

Solutions

Expert Solution

Inventory(I) = 24,935

Accounts receivable(AR) = $9,902

Accounts payable(AP) = $14,652

Credit sales(CS) = $186,978

Cost of goods sold(COGS) = $132,477

In order to calculate Cash Conversion Cycle (CCC) we need to calculate Days inventory outstanding (DIO), Days Sales outstanding (DSO) and Days payable outstanding (DPO)

And, Cash Conversion Cycle (CCC) would be:

jeff jeffy answered 2 years ago
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