The Flamingo Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash flow cycle. Last year, Flamingos sales (all on credit) were $180,000, and its cost of goods sold was 85 percent of sales. Inventory was turned over eight times yearly, and the accounts receivable turnover was 10. Flamingos payables deferral period is 30 days. (a) Calculate Flamingos cash conversion cycle (b) Compute the average balances in accounts receivable, accounts payable, and inventory

Begin by identifying what you know: Cost of goods sold = $ Cost of goods sold = Inventory Turnover = Accounts Receivable Turnover = Accounts Payable Turnover =

DQ #1: Flamingo Corporation wants to reduce its CCC. They feel that turning their inventory every 45 days are good, and are happy with this trend. Using actual days that you have calculated, what can they do with their payables and receivables to obtain this goal?