Answer:
The correct answer is 114.6 Days.
Explanation:
According to the scenario, the computation of the given data are as follows:
Cash conversion cycle = Outstanding Inventory days + Sales outstanding days - Payable outstanding days
Where, Outstanding inventory days = Average Inventory ÷ Cost of goods sold per day
= $75,000 ÷ ( $465,000 ÷ 365) = 58.87 Days
, Sales outstanding days = Average accounts receivable ÷ Sales per day
= $160,000 ÷ ( $775,000 ÷ 365) = 75.35 Days
And Payable outstanding days = Average accounts payable ÷ cost of goods sold per day
= $25,000 ÷ ( $465,000 ÷ 365) = 19.62 days
By putting the value in the formula, we get
Cash conversion cycle = 58.87 Days + 75.35 Days - 19.62 days
= 114.6 Days
