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John Doe Company is a manufacturing company. It normally takes 20 days to turn finished goods...

John Doe Company is a manufacturing company. It normally takes 20 days to turn finished goods into sales and another 40 days to receive payments from commercial customers. The company pays its suppliers usually 30 days after receiving the supplies. What is the company's cash conversion cycle?

CCC =   days

Solutions

Expert Solution

Operating cycle = days of sales outstanding + days of inventory on hand
Operating cycle = 40+20
Operating cycle = 60
Cash conversion cycle = Operating cycle - days of payables outstanding
Cash cycle = 60-30
Cash cycle = 30

jeff jeffy answered 2 years ago
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