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Determining the cash conversion cycle

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Cash conversion cycle

American Products is concerned about managing cash efficiently. On the? average, inventories have an age of 75 ?days, and accounts receivable are collected in 34 days. Accounts payable are paid approximately 30 days after they arise. The firm has annual sales of about ?$36 million. Cost of goods sold are ?$18 ?million, and purchases are ?$17million.

a. Calculate the? firm's operating cycle. ?(Round to the nearest whole? number.)

b. Calculate the? firm's cash conversion cycle. ?(Round to the nearest whole? number.)

c. Calculate the amount of resources needed to support the? firm's cash conversion cycle. ?(Round to the nearest whole? number.)

d. Discuss how management might be able to reduce the cash conversion cycle.

Reference no: EM132200014

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