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    afdamnperfect's Avatar
    afdamnperfect Posts: 2, Reputation: 1
    New Member
    		  
    #1

    Feb 1, 2010, 10:48 AM
    Cash Conversion Cycle. Calculate the accounts receivable period, accounts payable per
    Cash Conversion Cycle. Calculate the accounts receivable period, accounts payable period,
    Inventory period, and cash conversion cycle for the following firm:
    Income statement data:
    Sales 5,000
    Cost of goods sold 4,200
    Balance sheet data:
    Beginning of Year End of Year
    Inventory 500 600
    Accounts receivable 100 120
    Accounts payable 250 290
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
    Senior Member
    		  
    #2

    Feb 1, 2010, 11:38 PM

    Please use the following formulae:
    1. Accounts receivable period
    (Average accounts receivable x 365)/Sales
    2. Accounts payable period
    (Average accounts payable x 365)/Cost of Sales
    3. Inventory period
    (Average inventory x 365)/Cost of Sales

    Cash conversion cycle
    Accounts receivable days + Inventory days - Accounts payable days
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