Question

Quantitative Problem: Winston Inc. is trying to determine the effect of its inventory turnover ratio and days sales outstanding on its cash conversion cycle. Winston's 2017 sales (all on credit) were $162,000 and its cost of goods sold was 75% of sales. It turned over its inventory 8.51 times during the year. Its receivables balance at the end of the year was $13,115.93 and its payables balance at the end of the year was $7,410.39. Using this information calculate the firm's cash conversion cycle. Round your answer to the nearest whole. Round the days amounts in your intermediate calculations to the nearest whole day. Do not round other intermediate calculations.

Answer 1

Inventory turnover in days	43
Accounts receivable turnover in days	30
less Accounts payable turnover in days	22
Cash conversion cycle	51

workings:

a	Inventory turnover	8.51
b= 365/a	Inventory turnover in days	42.89
	Inventory turnover in days	43	Rounded off
a	Receivable balance at year end	13,115.93
b	Credit sales	1,62,000
c= a/b	Receivable turnover	12.35
d= 365/c	Receivable collection period	29.55
	Receivable collection period	30	Rounded off
a	Payables balance at year end	7,410.39
b	Cost of goods sold	1,21,500
c= a/b	Payable turnover	16.40
d= 365/c	Average payment period	22.26
	Average payment period	22	Rounded off