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scZoUnD [109]
3 years ago
10

Salty Dog Brewery has the following data, in thousands. Assuming a 365-day year, what is the company's cash conversion cycle? Hi

nt: Sales/Day = 123.29; COGS/Day = 82.19.Annual sales = $45,000Annual cost of goods sold = $30,000Inventory = $3,500Accounts receivable = $1,800Accounts payable = $2,800
Business
1 answer:
nexus9112 [7]3 years ago
7 0

Answer:

23.11 days

Explanation:

The computation of the cash conversion cycle is shown below:

The cash cycle = Days inventory outstanding + days sale outstanding - days payable outstanding  

where,

Day inventory outstanding = (Beginning inventory + ending inventory) ÷ cost of goods sold × number of days in a year

= ($3,500 ÷ $30,000) × 365 days

= 42.58 days

Day sale outstanding = (Beginning Accounts receivable + ending Accounts receivable) ÷ Annual sales × number of days in a year

= ($1,800 ÷ $45,000) × 365 days

= 14.6 days

Day payable outstanding = (Beginning Accounts payable + ending Accounts payable) ÷ cost of goods sold × number of days in a year

= ($2,800 ÷ $30,000) × 365 days

= 34.07 days

Now put these days to the above formula  

So, the days would equal to

= 42.58 days + 14.6 days - 34.07 days

= 23.11 days

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