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The cash conversion cycle

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Reference no: EM132017201

1. You have the following information:

Accounts receivable                       $160,000

Total credit sales $2,500,000

Assume a 360 day year and compute the receivables collection period.

2. Inventory conversion period 15 days

Closing inventory $28,000

Compute C O G S (assuming a 360 day year).

3. Inventory conversion period                      68.2 days

Receivables collection period 35.8 days

Payables deferral period 24.6 days

Compute the cash conversion cycle:

4. Inventory conversion period 55.8 days

Days sales outstanding 23.9 days

Days payables outstanding 32.5 days

The cash conversion cycle is:

Reference no: EM132017201

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