7. Cash conversion cycle Aa Aa Extensive Enterprise Inc. is a mature firm that has a stable flow of business. The following data were taken from its financial statements last year Annual sales Cost of goods sold Inventory Accounts receivable Accounts payable $29.0 million $23.2 million $3.1 million $1.9 million $2.8 million Extensive Enterprise Inc.'s CFO is interested in determining the length of time funds are tied up in working capital Use the information in the preceding table to complete the following table. (Note: Use 365 days as the length of a year in all calculations.) Value Inventory Conversion Period Average collection period Payables Deferral Period Cash conversion cycle Both the inventory conversion period and payables deferral period use the average daily COGS in their denominators, whereas the average collection period uses average daily sales in its denominator. Why do these measures use different inputs? O Current assets should be divided by sales, but current liabilities should be divided by the COGS O Inventory and accounts payable are carried at cost on the balance sheet, whereas accounts receivable are recorded at the price at which goods are sold