Calculate flamingo’s cash conversion cycle

Reference no: EM131407845

The Flamingo Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash flow cycle. Last year, Flamingo's sales (all on credit) were $180,000, and its cost of goods sold were 85 percent of sales. Inventory was turned over eight times during the year, and the accounts receivable turnover was 10. Flamingo's payables deferral period is 30 days.

(a) Calculate Flamingo's cash conversion cycle.

(b) Compute the average balances in accounts receivable, accounts payable, and inventory

Reference no: EM131407845

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