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
