Question

The following table shows income statement and balance sheet data for five U.S. industries in 2017.

INCOME STATEMENT AND BALANCE SHEET FOR 2017 SELECTED U.S. INDUSTRIES FOR 2017 (Figures in $ billions)
	Food				Pharmaceuticals				Oil and Coal				Computers and Peripherals				Food Stores
Income Statement Data:
Sales	$	679.9			$	440.5			$	815.0			$	229.0			$	487.2
Cost of goods sold		609.1				365.4				770.8				215.7				464.0
Balance Sheet Data:
Inventory	$	80.8			$	69.8			$	57.2			$	24.3			$	40.9
Accounts receivable		69.6				81.1				65.8				36.7				20.4
Accounts payable		62.0				55.3				63.3				78.5				36.7

Note: Cost of goods sold includes selling, general, and administrative expenses.

Source: U.S. Department of Commerce, Quarterly Financial Report for Manufacturing, Mining, Trade Corporations, and Selected Service Industries, Quarter 3, issued December 2017.

Calculate the cash cycle for each industry. (Negative amounts should be indicated by a minus sign. Use 365 days a year. Do not round intermediate calculations. Round your answers to 1 decimal place.)

Answer 1

Cash Conversion Cycle=receivable days+inventory days-payable days

1.Food:

receiavble days=(accounts receiavble days/sales)*365=(69.6/679.9)*365=37.4 days

inventory days=(Inventories/cost of goods sold)*365=(80.8/609.1)*365=48.4 days

payable days=(accounts payables/cost of goods sold)*365=(62/609.1)*365=37.2 days

Cash conversion cycle=37.4+48.4-37.2=48.6 days

2. Pharmaceuticals:

receiavble days=(accounts receiavble days/sales)*365=(81.1/440.5)*365=67.2 days

inventory days=(Inventories/cost of goods sold)*365=(69.8/365.4)*365=69.7 days

payable days=(accounts payables/cost of goods sold)*365=(55.3/365.4)*365=55.2 days

Cash conversion cycle=67.2+69.7-55.2=81.7 days

3. Oil and Coal

receiavble days=(accounts receiavble days/sales)*365=(65.8/815.0)*365=29.5 days

inventory days=(Inventories/cost of goods sold)*365=(57.2/770.8)*365=27.1 days

payable days=(accounts payables/cost of goods sold)*365=(63.3/770.8)*365=30.0 days

Cash conversion cycle=29.5+27.1-30.0=26.6 days

4. Computers and Peripheral

receiavble days=(accounts receiavble days/sales)*365=(36.7/229)*365=58.5 days

inventory days=(Inventories/cost of goods sold)*365=(24.3/215.7)*365=41.1 days

payable days=(accounts payables/cost of goods sold)*365=(78.5/215.7)*365=132.83 days

Cash conversion cycle=58.5+41.1-132.83=-33.2 days

5. Food Stores

receiavble days=(accounts receiavble days/sales)*365=(20.4/487.2)*365=15.3 days

inventory days=(Inventories/cost of goods sold)*365=(40.9/464)*365=32.2 days

payable days=(accounts payables/cost of goods sold)*365=(36.7/464)*365=28.9 days

Cash conversion cycle=15.3+32.2-28.9=18.6 days