Reference no: EM132898662

Question 1: Angel Corporation has an average accounts receivable balance of $1,250,000, average inventory balance of $1,750,000, and average accounts payable balance of $800,000. Its annual sales are $12,000,000 and its cost of goods sold represents 80% of annual sales. If there are 365 days in a year. What is Angel Corporation's cash conversion cycle?

Option 1: 72.28 days

Option 2: 84.15 days

Option 3: 100.55 days

Option 4: 60.83 days

Option 5: 53.23 days

Question 2: A company is offered trade credit terms of 3/15, net 30 days. The company does not take the discount, and it pays after 50 days. Compute for the effective annual cost of not taking this discount (using 365 days).

Option 1: 30.00%

Option 2: 44.30%

Option 3: 45.50%

Option 4: 32.25%

Option 5: 37.39%