Question

ack to Assignment Attempts: Keep the Highest: /3 4. Problem 21-11 (Cash Conversion Cycle) eBook Cash Conversion Cycle Negus Enterprises has an inventory conversion period of 70 days, an average collection period of 40 days, and a payables deferral period of 29 days. Assume that cost of goods sold is 80 % of sales. Assume a 365-day year. Do not round intermediate calculations. a. What is the length of the firm's cash conversion cycle? Round your answer to the nearest whole number days b. If annual sales are $4,562,500 and all sales are on credit, what is the firm's investment in accounts receivable? Round your answer to the nearest dollar c. How many times per year does Negus Enterprises turn over its inventory? Round your answer to two decimal places Chrtinle witiout stweg 26/11 TOSHIBA

Answer 1

1. CCC = Days of inventory outstanding + Days sales outstanding − Days payables outstanding

CCC = 70 + 40 - 29 = 81 days

2. Sales = 4,562,500 Credit sales = 100%

Firms investment in Accounts Receivables is the COGS= 4562500 x 80% = 3,650,000

3. Inventory Conversion Period = 365 / Inventory Turnover

70 = 365 / Inventory turnover

Inventory turnover = 365 / 70 = 5.124