Castillo Products Company improved its operations from a net loss in 2012 to a net profit in

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Castillo Products Company improved its operations from a net loss in 2012 to a net profit in 2013. While the founders, Cindy and Rob Castillo, are happy about these developments, they are concerned with trying to understand how long the firm takes to complete its cash conversion cycle in 2013. Use the following financial statements to make your calculations. Balance sheet items should reflect the averages of the 2012 and 2013 accounts.
A. Calculate the inventory-to-sale conversion period for 2013.
B. Calculate the sale-to-cash conversion period for 2013.
C. Calculate the purchase-to-payment conversion period for 2013.
D. Determine the length of the Castillo Product's cash conversion cycle for 2013.
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,...
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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Entrepreneurial Finance

ISBN: 978-1285425757

5th edition

Authors: J. Chris Leach, Ronald W. Melicher

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