Adong's Fishing Products is analyzing the performance of its cash management. On average, the firm holds inventory

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Adong's Fishing Products is analyzing the performance of its cash management. On average, the firm holds inventory 65 days, pays its suppliers in 35 days, and collects its receivables in 15 days. The firm has a current annual outlay of $1,960,000 on operating cycle investments. Adong currently pays 10 percent for its negotiated financing. (Assume a 360 day year.)

(a) Calculate the firm's cash conversion cycle.

(b) Calculate the firm's operating 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,...

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a Computation of the Cash Conversion Cycle Formula as CCC DIO DSO DPO W...View the full answer

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