Sterling Enterprises has an inventory conversion period of 50 days, an average collection period of 35 days,

Question:

Sterling Enterprises has an inventory conversion period of 50 days, an average collection period of 35 days, and a payables deferral period of 25 days. Assume that cost of goods sold is 80% of sales.

a. What is the length of the firm's cash conversion cycle?

b. If Sterling's annual sales are $4,380,000 and all sales are on credit, what is the firm's investment in accounts receivable?

c. How many times per year does Sterling Enterprises turn over its inventory?

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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