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Cash conversion cycle American Products is concerned about managing cash efficiently. On the average, inventories have an age of 79 days, and accounts receivable are
Cash conversion cycle American Products is concerned about managing cash efficiently. On the average, inventories have an age of 79 days, and accounts receivable are collected in 35 days. Accounts payable are paid approximately 26 days after they arise. The firm has annual sales of about $35 million. Cost of goods sold are $20 million, and purchases are $13 million. a. Calculate the firm's operating cycle. b. Calculate the firm's cash conversion cycle. c. Calculate the amount of resources needed to support the firm's cash conversion cycle. d. Discuss how management might be able to reduce the cash conversion cycle. a. American Products' operating cycle, OC, is days. (Round to the nearest whole number.)
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