Canadian Products is concerned about managing its operating assets and liabilities efficiently Inventories have an average age of 110 days, and accounts receivable have an average age of 50 days Accounts payable are paid approximately 40 days after they arise The firm has annual sales of $36 millio...

a The firms operating cycle is the sum of its average age of ...

Canadian Products is concerned about managing its operating assets and liabilities efficiently. Inventories have an average age

Question:

Canadian Products is concerned about managing its operating assets and liabilities efficiently. Inventories have an average age of 110 days, and have an average age of 50 days. are paid approximately 40 days after they arise. The firm has annual sales of $36 million, its cost of goods sold represents 75% of sales, and its purchases represent 70% of cost of goods sold. Assume a 365-day year.
a. Calculate the firm’s operating cycle (OC).
b. Calculate the firm’s (CCC).
c. Calculate the amount of total resources Canadian Products has invested in its CCC.
d. Discuss how management might be able to reduce the amount of total resources invested in the CCC.
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...