S12-7. (Learning Objective 4: Computing and evaluating cash collection cycle) Use the Gargantua 20X6 Income Statement shown here and the Balance Sheet from Short Exercise 12-6 to compute its cash conversion cycle for the year 20X6. Identify all components of the cash conversion cycle clearly.

Do these measures look strong or weak? Give reasons for your answer.

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A1 = Gargantua, Inc. Statements of Income (Adapted) 2 (Dollar amounts in millions) 3 Revenues Dec 31, 20X6 Dec 31, 20X5 $ 9,550 $ 9,086 4 Expenses: 56989 10 Cost of goods sold Payroll and employee benefits Occupancy and other operating expenses General and administrative expenses Interest expense Other expense (income), net 11 Income before income taxes 12 Income tax expense 13 Net income 14 2,230 2,248 2,134 2,004 2,776 2,784 1,175 1,131 154 136 12 (32) 1,069 851 288 252 $ 781 $ 599