Required 1. What is the Accounts Receivable Turnover? 2. What is the Days Accounts Receivable Outstanding? 3. What is the Inventory Turnover? 4. What is the Days Inventory held? 5. What is the Accounts Payable Turnover? 6. What is the Days Accounts Payable Outstanding? 7. What is the Operating Cycle? 8. What is the Cash Conversion Cycle? This is an opportunity to work with Accounts Receivable, Inventory, and Accounts Payable. With any problem statement we operate with whatever data is given. While the ideal would be that sales is subdivided between credit sales and cash sales, like in this problem, if we only have total sales, then we use total sales in the accounts receivable turnover. Also, feel free to use years of 360 rather than 365 days. That should never make a difference in the right-ness or wrong-ness of your response. Accounts Receivable Turnover = Net credit sales / Average accounts receivable Days Accounts Receivable outstanding =365 / Accounts Receivable Turnover Inventory Turnover = Cost of goods sold / Average inventory Days Inventory held =365/ Inventory Turnover Inventory Purchases = Cost of goods sold + ending Accounts Payable - beginning Accounts Payable Accounts Payable Turnover = Inventory Purchases / Average accounts payable Days Accounts Payable outstanding =365 / Accounts payable turnover Operating cycle = Days in receivables + Days in inventory You can see that the operating cycle is the time from purchase of inventory from the vendor to collection of cash from the customer. Cash conversion cycle = operating cycle - days accounts payable outstanding Problem Statement Selected data of Islander Company follow