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Question 3: Sun Products is concerned about managing cash efficiently. The firm is concerned to measure the firm's cash conversion cycle, operating cycle, production cycle,
Question 3: Sun Products is concerned about managing cash efficiently. The firm is concerned to measure the firm's cash conversion cycle, operating cycle, production cycle, collection cycle, and payment cycle, so as to see if any changes are warranted. The necessary information on the table below: Cash sales $300,000 Credit sales $500,000 Total sales $800,000 Cost of goods sold $560,000 Ending Balance Beginning Balance Accounts receivable $30,000 $45,000 Inventory $26,000 $12,000 Accounts payable $10,000 6,000 S a. Calculate the firm's operating cycle. b. Calculate the firm's cash conversion cycle. c. Discuss how management might be able to reduce the cash conversion cycle. Question 4
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