Everdeen Inc. has a 90-day operating cycle. If its average age of inventory is 35 days, how
Question:
Everdeen Inc. has a 90-day operating cycle. If its average age of inventory is 35 days, how long is its average collection period? If its average payment period is 30 days, what is its cash conversion cycle? Place all this information on a timeline similar to Figure 15.2.
Transcribed Image Text:
FIGURE 15.2 Timeline for Best Buy's Cash Conversion Cycle Best Buy's operating cycle in 2017 was 71 days, and its cash conversion cycle was 12 days. 71 days Time = 0 Operating Cycle (OC) Collect Purchase Raw Materials on Account Sell Finished Goods on Account Accounts Receivable Average Age of Inventory (AAI) Average Collection Period (ACP) 12 days 59 days Pay Accounts Cash Inflow Payable | Cash Conversion |Cycle (CCC) 10 days Average Payment Period (APP) 61 days Cash Outflow Time
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 55% (9 reviews)
Operating cycle Average age of inventory Average collection period Average collection perio...View the full answer
Answered By
Jinah Patricia Padilla
Had an experience as an external auditor in Ernst & Young Philippines and currently a Corporate Accountant in a consultancy company providing manpower to a 5-star hotel in Makati, Philippines, Makati Diamond Residences
5.00+
120+ Reviews
150+ Question Solved
Related Book For
Principles of Managerial Finance
ISBN: 978-0134476315
15th edition
Authors: Chad J. Zutter, Scott B. Smart
Question Posted:
Related Video
Days payable outstanding is an efficiency ratio that measures the average number of days a company takes to pay its suppliers. The video shows how to effectively calculate days Payable outstanding.
Students also viewed these Business questions
-
GEP Manufacturing is mulling over a plan to rent a proprietary inventory control system at an annual cost of $4.5 million. The firm predicts its sales will remain relatively stable at $585 million...
-
Sharam Industries has a 120-day operating cycle. If its average age of inventory is 50 days, how long is its average collection period? If its average payment period is 30 days, what is its cash...
-
Everdeen, Inc., has a 100-day operating cycle. If its average age of inventory is 35 days, how long is its average collection period? If its average payment period is 30 days, what is its cash...
-
Explain why learning reduces the effective marginal cost of production. If firms set prices in proportion to their marginal costs, as suggested by the Economics Primer, how can learning firms ever...
-
Prove Theorem D as follows: Let (a) Show that the series converges for |x| (b) Show that (1 + x)f'(x) = pf(x) and f(0) = 1. (c) Solve this differential equation to get f(x) = (1 + x)p? f(x) = 1 + )-
-
Write the expression for Kc for the following reactions. In each case indicate whether the reaction is homogeneous or heterogeneous. (a) 3NO(g) N 2 O(g) + NO 2 (g) (b) CH 4 (g) + 2H 2 S(g) CS 2 (g)...
-
In 2014, political consulting firm Cambridge Analytica developed an app designed to create digital profiles of individuals via their information. Cambridge Analytica collected the data by inviting...
-
Doughty Sawmill, Inc., (DSI) purchases logs from independent timber contractors and processes the logs into three types of lumber products: Studs for residential buildings (walls, ceilings)...
-
Describe the growth of organized labor. What were some of the early unions that appeared at this time? What important strikes occurred at this time?
-
Flint Corporation markets CDs of numerous performing artists. At the beginning of March, Flint Corporation had in beginning inventory 2,460 CDs with a unit cost of $7. During March, Flint Corporation...
-
For many non-financial firms, extending trade credit is an important part of doing business. A challenge for these firms is that, unlike banks, they often lack long experience managing such...
-
Mama Leones Frozen Pizzas uses 50,000 pounds of cheese per year. Each pound costs $5.50. The ordering cost for the cheese is $250 per order, and its carrying cost is $1.50 per pound per year....
-
Why would you expect that the higher ones tax rate the larger the behavioral response to a tax rate reduction? Why might across-the-board tax rate reductions increase tax revenues from high tax...
-
Provide specific accounting arrangements and conventions employed by a well-known company (other than Apple or Nike) to illustrate how these conventions contribute to standardized financial reportin?
-
IS auditor would like to analyze system access logs on a real-time basis. How do you categorize this requirement?
-
Company x is issuing tax-basis financial statements. how should x present a $250,000 erc in its 2021 statement of income?
-
Sean cpa is the accountant for company z, an s corporation. sean suggests that z make the pte tax election. How should z account for the pte tax on z's financial statements?
-
Consider a small multinational company, Carrat Inc., which specializes in the production of precision tools. The company is based out of Warsaw, Poland and has a major client in Russia. Annually,...
-
We know that a compass points northward because Earth is a giant magnet. Will the northward-pointing needle point northward when the compass is brought to the Southern Hemisphere?
-
On October 1, 2014, the Dow Jones Industrial Average (DJIA) opened at 17,042 points. During that day it lost 237 points. On October 2 it lost 4 points. On October 3 it gained 209 points. Deter-mine...
-
Ed Martin, the pension fund manager for Stark Corporation, is considering purchase of a put option in anticipation of a price decline in the stock of Carlisle, Inc. The option to sell 100 shares of...
-
Ed Martin, the pension fund manager for Stark Corporation, is considering purchase of a put option in anticipation of a price decline in the stock of Carlisle, Inc. The option to sell 100 shares of...
-
Morris Company, a small manufacturing firm, wants to acquire a new machine that costs $30,000. Arrangements can be made to lease or purchase the machine. The firm is in the 40% tax bracket. The firm...
-
13) A local business owner is considering adding another employee to his staff in an effort to increase the number of hours the store is open per day. a. If the employee will cost the owner $4,000...
-
The standard variable overhead rate for Unbeatable Toys is $5. Budgeted fixed overhead is $20,000. Unbeatable Toys' budgeted production was 2,000 units for the current period and actual production...
-
STS plc collects waste from houses, offices and factories. Most of the waste is burned to produce heat and electricity for the companys own use. This saves costs and reduces the impact on the...
Study smarter with the SolutionInn App