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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
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 were 85% of sales. Inventory was turned over eight times during the year, and the accounts receivable turnover was 10. Flamingos payables deferral period is 30 days. (a) Calculate Flamingos cash conversion cycle. (b) Computer the average balances in accounts receivable, accounts payment, and inventory.
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