Question
4. Cash conversion cycle Cash management is a very important function of managers. Companies need to manage their operations in a way that they can
4. Cash conversion cycle
Cash management is a very important function of managers. Companies need to manage their operations in a way that they can sustain growth and yet not run out of cash.
Consider the case of the Red Hamster Manufacturing Corporation:
Red Hamster Manufacturing Corporation has forecasted sales of $29,000,000 for next year and expects its cost of goods sold (COGS) to remain at 80% of sales. Currently, the firm holds $2,800,000 in inventories, $2,200,000 in accounts receivable, and $2,600,000 in accounts payable.
Approximately how long does it take Red Hamster Manufacturing to convert its raw materials to its finished products and then to sell those goods? (Note: Use 365 days as the length of a year in all calculations, and round all values to two decimal places.)
41.85 days
46.25 days
44.05 days
39.64 days
On average, it takes ***** from the time a sale is made until the time cash is collected from customers.
Red Hamster Manufacturing relies on customer credit when it buys raw materials from its suppliers. On average, it takes ****after the firm purchases materials before it sends cash to its suppliers. The length of Red Hamster Manufacturings cash conversion cycle (CCC) is ***** .
What is the length of Red Hamster Manufacturings cash conversion cycle (CCC)?
35.45 days
33.91 days
37.00 days
30.83 days
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