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The Dewey Corporation has the following data, in thousands. Assuming a 365-day year, what is the firm's cash conversion cycle?
Annual sales =
Annual cost of goods sold =
Inventory =
Accounts receivable =
Accounts payable = $45,000
$31,500
$4,000
$2,000
$2,400
a. 25 days
b. 28 days
c. 31 days
d. 35 days
e. 38 days

Respuesta :

Tundexi

Answer:

d. 35 days

Explanation:

Cash conversion cycle = Average inventory/ (COGS/365) + Average account receivables/(Credit sales/365) - Average account payable / (COGS/365)

Cash conversion cycle = 4,000 / (31,500/365) + 2,000/(45,000/365) - 2,400/(31,5000/365)

Cash conversion cycle = 4,000/86.3014 + 2,000/123.2877 - 2,400/86.3014

Cash conversion cycle = 46.3492 + 16.2222 - 27.8095

Cash conversion cycle = 34.7619

Cash conversion cycle = 35 days

abiolataiwo2015

Based on the information given Cash conversion cycle is d. 35 days.

Cash conversion cycle = Days in Inventory + Days in Receivables – Days in payables

Cash conversion cycle = Inventory/Cost of Goods sold×365 + Accounts receivables/Annual Sales×365 – Accounts payable/Cost of goods sold×365

Let plug in the formula

Cash conversion cycle= 4,000 /31,500×365+ 2,000/45,000×365 - 2,400/31,5000×365)

Cash conversion cycle = 46.3492 + 16.2222 - 27.8095

Cash conversion cycle = 34.7619

Cash conversion cycle = 35 days (Approximately)

Inconclusion Cash conversion cycle is d. 35 days.

Learn more about Cash conversion cycle here:https://brainly.com/question/25687278

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