Metal Supplies is concerned about its cash management. On average, the days sales in inventory (duration of

Question:

Metal Supplies is concerned about its cash management. On average, the day’s sales in inventory (duration of inventory on shelf) is 90 days. Accounts receivable are collected in 90 days, while accounts payable are paid in 60 days. Metal Supplies has annual sales of $14 million, cost of goods sold of $9.5 million, and purchases of $5 million. Use a 365-day year.
a. What is Metal Supplies’ operating cycle (OC)?
b. What is Metal Supplies’ cash conversion cycle?
c. What is the amount of resources needed to support Metal Supplies’ cash conversion cycle?
d. What suggestions would you give Metal Supplies to reduce its cash conversion cycle?

Fantastic news! We've located the answer you've been seeking!

Step by Step Answer:

Related Book For  answer-question

Principles Of Managerial Finance

ISBN: 9781292018201

14th Global Edition

Authors: Lawrence J. Gitman, Chad J. Zutter

Question Posted: