American Products cares about managing cash efficiently. On average, inventories are 90 days old and accounts receivable
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Question:
American Products cares about managing cash efficiently. On average, inventories are 90 days old and accounts receivable are collected in 60 days. Accounts payable are paid approximately 30 days after they arise. The company's operating cycle investments are $30 million per year. Cost of goods sold is $20 million and purchases are $15 million.
Required
a. Calculate the operating cycle of the company.
b. Calculate the company's cash conversion cycle.
C. Calculate the amount of resources needed to support the company's cash conversion cycle.
d. Discuss how management could shorten the cash conversion cycle.
Related Book For
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
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