Question
GTC Inc. sells on credit terms of 3/10, net 50. While 30% of customers pay on the 10th day and take the discount, the other
GTC Inc. sells on credit terms of 3/10, net 50. While 30% of customers pay on the 10th day and take the discount, the other 70% pay on the 50th day.
The company's ICP (Inventory conversion period) =90 days
The company's PDP (Payables deferral period) = 50 days
The company's sales = $10 million
The company's COGS (Cost of goods sold) = 80% of sales.
a) Find the cash conversion cycle (CCC). (10 pts)
b) Find the amount of accounts receivables. (5 pts)
c) Find the company's inventory turnover. (5pts)
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Financial Management Core Concepts
Authors: Raymond M Brooks
2nd edition
132671034, 978-0132671033
