Black Sheep Broadcasting Company is a mature firm that has a stable flow of business. The following data was taken from its financial statements last year:

Annual sales	$9,900,000
Cost of goods sold	$7,425,000
Inventory	$2,900,000
Accounts receivable	$1,800,000
Accounts payable	$2,500,000

Black Sheep Broadcastings CFO is interested in determining the length of time funds are tied up in working capital. Use the information in the preceding table to answer the following questions. (Note: Use 365 days as the length of a year in all calculations, and round all values to two decimal places.)

What is the value of the inventory conversion period?

50.19 days

142.56 days

38.79 days

43.35 days

Both the inventory conversion period and payables deferral period use the average daily COGS in their denominators, whereas the average collection period uses average daily sales in its denominator. Why do these measures use different inputs?

Current assets should be divided by sales, but current liabilities should be divided by the COGS.

Inventory and accounts payable are carried at cost on the balance sheet, whereas accounts receivable are recorded at the price at which goods are sold.

What is the average collection period?

20.39 days

26.06 days

66.36 days

23.79 days

What is the payables deferral period?

122.90 days

43.26 days

47.20 days

37.36 days

What is the cash conversion cycle?

33.30 days

30.41 days

86.02 days

36.20 days