Question

Dewey Corporation has the following data, in thousands. Assuming a 365-day year, what is the firm's cash conversion cycle?





Annual sales =


$55,000



Annual cost of goods sold =


$38,500



Inventory =


$4,000



Accounts receivable =


$2,000



Accounts payable =


$2,400







a)36 days
b)21 days
c)28 days
d)27 days
e)24 days

Answer 1

Answer 2

what is the firm's cash conversion cycle?
Annual sales = $55,000
Annual cost of goods sold =$38,500
Inventory = $4,000
Accounts receivable =$2,000
Accounts payable =$2,400
CCC = Inventory/(COGS/365) + Accounts Receivable/(Credit Sales/365) – Accounts Payable/(COGS/365)
ie CCC = 4000/(38500/365) + 2000/(55000/365) - 2400/(38500/365)
ie CCC = 28 days

c)28 days