Your boss asks you to compute the companys cash conversion cycle . Looking at the financial statements,

Question:

Your boss asks you to compute the company’s cash conversion cycle. Looking at the financial statements, you see that the average inventory for the year was $26,300, accounts receivable were $17,900, and accounts payable were $15,100. You also see that the company had sales of $154,000 and that cost of goods sold was $122,000. Calculate and interpret your firm’s cash conversion cycle.

Cash Conversion Cycle
Cash conversion cycle measures the total time a business takes to convert its cash on hand to produce, pay its suppliers, sell to its customers and collect cash from its customers. The process starts with purchasing of raw materials from suppliers,... Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...