Cash Conversion Cycle Assignment | Homework For You
P15-1 Cash conversion cycle
American Products is concerned about managing cash eff ciently. On the average, inventories have an age of 90 days, and accounts rece are collected in 60 days. Accounts payable are paid approximately 30 days after arise. The firm has annual sales of about $30 million. Assume there is no differe in the investment per dollar of sales in inventory, receivables, and payables and that there is a 365-day year.
a. Calculate the firm’s operating cycle.
b. Calculate the firm’s cash conversion cycle.
c. Calculate the amount of resources needed to support the firm’s cash conversion cycle.
d. Discuss how management might be able to reduce the cash conversion cycle. Get Finance homework help today