ABC Co. is in the production of plastic bottles. They produce 10,000 pieces per day. They purchase their raw material and pay them 60 days later. The cost of raw material is 0.25 $ per unit. The raw material inventory is enough for 10 days of production and the finished goods inventory is 300,0000 pieces. Once the raw material I enters production it is converted to finished goods, hence there is no Work-in-Progress inventory. Sales are done on a 90 days term, i.e. sales proceeds are collected 90 days from sales.

a) What is Company ABC's cash conversion cycle? Draw the cash flow cycle.

b) What is the Working Capital requirement of the Company?

Answer rating: 100% (QA)

a To calculate ABC Cos cash conversion cycle youll need to consider the various time periods involve... View the full answer