Question

(Cash conversion cycle​) Historical data for the​ firm's sales, accounts​ receivable, inventories, and accounts payable for the Crimson Mfg. Company​ follow:

a. Calculate​ Crimson's days of sales​ outstanding, days of payables​ outstanding, and days of sales in inventory for each of the 5 years. ​(Assume a​ 365-day year. Hint​: Assume that the​ firm's cost of goods sold equals​ 70% of​ sales.) What has Crimson accomplished in its atempts to better manage its investments in account receivable and​ inventory?

b. Calculate​ Crimson's cash conversion cycle for each of the 5 years. Evaluate the​ firm's overall management of its working capital. Assume a​ 365-day year.

a. Calculate​ Crimson's days of sales​ outstanding, days of payables​ outstanding, and days of sales in inventory for each of the 5 years. Assume a​ 365-day year. ​Hint: Assume that the​ firm's cost of goods sold equals​ 70% of sales.

 

2014   2015   2016   2017   2018
Sales 4,379   5,256   7,919   11,625   18,427
Receivables 607   793   1,092   1,381   2,256
Acounts payable  430   660   680   1,502   2,420
Inventories 321   440   653   388   347

Answer 1

Calculation of each part is given below

Following shows the working