Question

In: Finance

2. In the table below is information for two companies:                                $000)

2. In the table below is information for two companies:

                               $000)

Company K

Company L

Net sales(revenues

21,472

23,314

Cost of goods sold

13,050

5,192

Average inventory

350

457

Average accounts receivable

1,837

4,996

Average accounts payable

2,025

1,048

Turnover days

Days inventory outstanding

37

32

Days sales outstanding

31

78

Days payable outstanding

61

75

Total assets

        12,500

       12,000

Cash conversion cycle

From the above data, make the observations about the relative performance and determine better-performed company. (Remember that the shorter the number of days in this cycle, more the amount of available cash, and less need to borrow).

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