Question

Accounts payable, end of year Accounts receivable, net, end of year Inventory, end of year Net sales Cost of goods sold Current Year $ 6,163 22,645 8,464 194,000 103,000 Prior Year $ 10,108 16,794 7,735 153,000 123,000 (1) Use the information above to compute the number of days in the cash conversion cycle for each year. (2) Did the company manage cash more effectively in the current year? X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Use the information above to compute the number of days in the cash conversion cycle for each year. (Use 365 days in a year. Round calculations to the nearest whole day.)

Answer 1

				Current Year		Prior Year
1)	Cash conversion cycle			51	days	33
2)	Yes

Workings:

	Computation of:				Current Year		Prior Year
	Days inventory outstanding				0.082175		0.062886
	(Ending Inventory / COGS)				($ 8464 / 103000)		($ 7735 / $ 123000)
Add:	Days sales outstanding				0.116727		0.109765
	(Accounts Receivable / Net Sales)				($ 22645 / $ 194000)		($ 16794 / $ 153000)
Less:	Days payable outstanding				0.059835		0.082179
	(Accounts Payable / COGS)				($ 6163 / $ 103000)		($ 10108 / $ 123000)
	In years				0.139067		0.090472
	Multiplied by 365 days				51	days	33	days

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