Stratosphere Wireless is examining its cash conversion cycle . The company expects its cost of goods sold,
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Stratosphere Wireless is examining its cash conversion cycle. The company expects its cost of goods sold, which equals 80 percent of sales, to be $480,000 this year. Stratosphere normally turns over inventory 24 times per year, accounts receivable are turned over 15 times per year, and the accounts payable turnover is 40. Calculate
(a) The cash conversion cycle
(b) The average balances in accounts receivable, accounts payable, and inventory.
Cash Conversion CycleCash 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...
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