Question
please respond to my answer. M6-19: Computing Cash Conversion Cycle for Two Years. Winnebago Industries has the following metrics for 2018 and 2017: Amount in
please respond to my answer.
M6-19: Computing Cash Conversion Cycle for Two Years. Winnebago Industries has the following metrics for 2018 and 2017:
Amount in days 2018 2017
Days sales outstanding 26.2 22.5
Days inventory outstanding 35.9 36.5
Days payable outstanding 17.0 17.0
Cash conversion cycle = Days inventory outstanding + days sales outstanding days payables outstanding
Cash conversion cycle for 2018 = 35.9 + 26.2 17.0 = 45.1 days
Cash conversion cycle for 2017 = 36.5 + 22.5 17.0 = 42 days
An increase of 0.4 days inventory outstanding and an increase of 3.7 days sales outstanding from 2017 to 2018 accounts for the change in the cash conversion cycle from 42 days in 2017 to 45.1 days in 2017.
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