The Hopewell Pharmaceutical Company’s balance sheet and income statement for last year are as follows:

Balance Sheet (in Millions of Dollars)

Assets Liabilities and Equity Cash and marketable securities $1,100 Accounts payable*** $ 900 Accounts receivable*** 1,300 Accrued liabilities Inventories***** 800 (salaries and benefits) 300 Other current assets 200 Other current liabilities 700 Total current assets $3,400 Total current liabilities $1,900 Plant and equipment (net) 2,300 Long-term debt and other Other assets 1,000 liabilities 1,000 Total assets $6,700 Common stock 1,800 Retained earnings 2,000 Total stockholders’ equity $3,800 Total liabilities and equity $6,700

*Assume that average accounts receivable are the same as ending accounts receivable.

**Assume that average inventory over the year was the same as ending inventory.

***Assume that average accounts payable are the same as ending accounts payable.

Income Statement (in Millions of Dollars)

Net sales $6,500 Cost of sales 1,500 Selling, general, and administrative expenses 2,500 Other expenses 800 Total expenses $4,800 Earnings before taxes 1,700 Taxes 680 Earnings after taxes (net income) $1,020

a. Determine Hopewell’s cash conversion cycle.

b. Give an interpretation of the value computed in part

a. LO1