Question

In: Finance

Suppose that LilyMac Photography has annual sales of $221,000, cost of goods sold of $156,000, average...

Suppose that LilyMac Photography has annual sales of $221,000, cost of goods sold of $156,000, average inventories of $6,400, average accounts receivable of $28,800, and an average accounts payable balance of $19,100. 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. Round your final answer to 2 decimal places.)

Expert Solution

Cash Cycle

=

Days Inventory outstanding + Days sales outstanding - Days Payable Outstanding

=

14.97

+

47.57

-

44.69

=

17.85

Days

Working:

a.

Inventory turnover

=

Cost of goods sold/Average inventory

=

$ 1,56,000

/

$ 6,400

=

24.38

days

b.

days inventory outstanding

=

365

/

24.38

=

14.97

c.

receivable Turnover

=

Net credit sales /Average Accounts receivable

=

221000

/

28800

=

7.67

d.

Days sales outstanding

=

365

/

7.67

=

47.57

e.

Payable turnover

=

Cost of goods sold/Average Accounts Payable

=

$ 1,56,000

/

19100

=

8.17

f.

Days payable outstanding

=

365

/

8.17

=

44.69

jeff jeffy answered 2 years ago

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