2. [Cash Conversion Cycle] Castillo Products Company improved its operations from a net loss in 2015 to a net profit in 2016. While the founders, Cindy and Rob Castillo, are happy about these developments, they are concerned with trying to understand how long the firm takes to complete its cash conversion cycle in 2016. Use the following financial statements to make your calculations. Balance sheet items should reflect the averages of the 2015 and 2016 accounts.

CASTILLO PRODUCTS COMPANY
INCOME STATEMENT		2015	2016
Net sales		$900,000	$1,500,000
Cost of goods sold		540,000	900,000
Gross profit		360,000	600,000
Marketing		90,000	150,000
General and administrative		250,000	250,000
Depreciation		40,000	40,000
EBIT		20,000	160,000
Interest		45,000	60,000
Earnings before taxes		65,000	100,000
Income taxes		0	25,000
Net income (loss)		$65,000	$ 75,000
BALANCE SHEET	2015			2016
Cash	$ 50,000			$ 20,000
Accounts receivable	200,000			280,000
Inventories	400,000			500,000
Total current assets	650,000			800,000
Gross fixed assets	450,000			540,000
Accumulated depreciation	100,000			140,000
Net fixed assets	350,000			400,000
Total assets	$1,000,000			$1,200,000
Accounts payable	$ 130,000			$160,000
Accruals	50,000			70,000
Bank loan	90,000			100,000
Total current liabilities	270,000			330,000
Long-term debt	300,000			400,000
Common stock (0.05 par)	150,000			150,000
Additional paid-in-capital	200,000			200,000
Retained earnings	80,000			120,000
Total liabilities and equity	$1,000,000			$1,200,000

A. Calculate the inventory-to-sale conversion period for 2016.

B. Calculate the sale-to-cash conversion period for 2016.

C. Calculate the purchase-to-payment conversion period for 2016.

D. Determine the length of the Castillo Products cash conversion cycle for 2016.