Skymax has an inventory turnover rate of 11.8, an accounts payable period of 32 days, and...

Skymax has an inventory turnover rate of 11.8, an accounts payable period of 32 days, and an accounts receivable period of 39 days. What is the length of the cash cycle?

		45.68 days
		41.02 days
		37.93 days
		34.29 days
		30.05 days

Solutions

Expert Solution

Days of inventory on hand= 365/ Inventory turnover

= 365/ 11.8

= 30.93 days

Cash conversion cycle= Days of inventory outstanding + Days of sales outstanding – Days of payables outstanding

= 30.93 + 39 – 32

= 37.93 days.

Hence, the answer is option c.

In case of any query, kindly comment on the solution.

jeff jeffy answered 9 months ago

Next > < Previous

Related Solutions

Ferry's Furniture Outlet has an accounts receivable period of 51.06 days and an accounts payable period...

Ferry's Furniture Outlet has an accounts receivable period of 51.06 days and an accounts payable period of 43.07 days. The company turns over its inventory 5.69 times per year. What is the length of the company's operating cycle? Assume 365 days per year. 94.13 days 72.14 days 21.08 days 115.21 days 107.22 days

1. Custom Cars an accounts payable period of 42 days and an accounts receivable period of...

1. Custom Cars an accounts payable period of 42 days and an accounts receivable period of 36 days. The company turns over its inventory 12.8 times per year. What is the length of Custom Cars operating cycle and what is the length of Custom Car’s cash cycle? (please show how you arrive at your answer) 2. Patti’s Perfect currently has a 77 day operating cycle. The company is concentrating on increasing its inventory turnover rate from 6.5 times per year...

The cash cycle is equal to the: inventory period minus the accounts payable period. operating cycle...

The cash cycle is equal to the: inventory period minus the accounts payable period. operating cycle plus the accounts payable period. operating cycle minus the accounts receivable period. accounts receivable period minus the accounts payable period plus the inventory period. inventory period minus the accounts receivable period minus the accounts payable period.

What is the relationship between the inventory turnover ratio and the "days of inventory"? For a...

What is the relationship between the inventory turnover ratio and the "days of inventory"? For a given amount of cost of goods sold, as inventory turnover ratio increases, the "days of inventory" cannot be predicted to increase or decrease increases initially increases, then decreases decreases

Average Inventory, Inventory Turnover Ratio, Inventory Turnover in Days Belt Company had net sales of $1,891,675,000...

Average Inventory, Inventory Turnover Ratio, Inventory Turnover in Days Belt Company had net sales of $1,891,675,000 and cost of goods sold of $1,713,635,000. Belt had the following balances: January 1 December 31 Inventories $301,500,000 $385,000,000 Required: Assume 365 days per year. 1. Calculate the average inventory. $ 2. Calculate the inventory turnover ratio. Round to two decimal places. times 3. Calculate the inventory turnover in days. Round to two decimal places. days

A firm has days' sales in an inventory of 105 days, an average collection period of...

A firm has days' sales in an inventory of 105 days, an average collection period of 35 days, and takes 42 days, on average, to pay its accounts payable. Taken together, what do these three figures imply about the firm's operations and its cash flows?

Famous Farm's payables deferral period (PDP) is 40 days (on a 365-day basis), accounts payable are...

Famous Farm's payables deferral period (PDP) is 40 days (on a 365-day basis), accounts payable are $120 million, and its balance sheet shows inventory of $208 million. What is the inventory turnover ratio?

Pepsi Last year Days Sales Outstanding (A/R period) 41.59 Days Inventory (Inventory Period) 41.93 Payables Period...

Pepsi Last year Days Sales Outstanding (A/R period) 41.59 Days Inventory (Inventory Period) 41.93 Payables Period (A/P period) 154.33 Using this information, compute the Cash Cycle for this company. Cash Cycle = Days Sales Outstanding + Days Inventory – Payables Period Questions What is the length of this company’s cash cycle? (Show us your work!) What information does this give you about the company’s need for cash? Do you feel that this company must seek out short-term financing? Please explain...

Current Ratio: Asset Turnover Ratio: Inventory Turnover Ratio: Days In Sales Inventory Ratio: Gross Margin Ratio:...

Current Ratio: Asset Turnover Ratio: Inventory Turnover Ratio: Days In Sales Inventory Ratio: Gross Margin Ratio: Earning Per Share Ratio: Discuss what each ratio indicates about company performance. What does each ratio “tell” about a company? Interpret the ratios and use the interpretation as a basis to analyze the operational effectiveness .

Inventory Turnover and Days’ Sales in Inventory The Southern Company installed a new inventory management system...

Inventory Turnover and Days’ Sales in Inventory The Southern Company installed a new inventory management system at the beginning of 2015. Shown below are data from the company’s accounting records as reported out by the new system: 2015 2016 Sales Revenue $8,000,000 $11,000,000 Cost of Goods Sold 4,000,000 4,800,000 Beginning Inventory 510,000 530,000 Ending Inventory 530,000 600,000

Subjects