Answer:
148.02 days
Explanation:
The computation of the cash conversion cycle is shown below:
As we know that
Cash conversion cycle is = Days inventory outstanding + days sale outstanding - days payable outstanding
where,
Number of days inventory outstanding is
= Average inventory ÷ cost of goods sold per day
= $75000 ÷ ($360,000 ÷ 365 days)
= 76.04 days
Number of days sales outstanding is
= Average account receivable ÷ Average sales per day
= $160,000 ÷ ($600,000 ÷ 365)
= 97.33 days
And, the number of days payable outstanding is
= Average accounts payable ÷ cost pf goods sold per day
= $25,000 ÷ ($360,000 ÷ 365)
= 25.35 days
So, the cash conversion cycle is
= 76.04 days + 97.33 days - 25.35 days
= 148.02 days
