[afdamnperfect]

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]

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