Question: American Products is concerned about managing cash efficiently. On average, inventories have an age of 90 days, and accounts receivable are collected in 60 days.

American Products is concerned about managing cash efficiently. On average, inventories have an age of 90 days, and accounts receivable are collected in 60 days. Accounts payable are paid approximately 30 days after they arise. The firms operating-cycle investments are $30 million per year.Cost of goods sold are $20 million, and purchases are $15 million.

a. Calculate the firms operating cycle.

b. Calculate the firms cash conversion cycle.

c. Calculate the amount of resources needed to support the firms cash conversion cycle.

d. Discuss how management might be able to reduce the cash conversion cycle.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

FNSFMB513-Present credit options to clients with special financial circumstances (Release 1) Role Play - Conversation (Allan Parker) Scenario Instructions You are to use the Product Comparison done...

Cash Conversion Cycle: American products is concerned about managing cash efficiently. On average, inventories have an age of 90 days, and accounts receivable are collected in 60 days. Accounts...

American Products is concerned about managing cash efficiently. On average, inventories have an age of 90 days, and accounts receivables are collected in 60 days. Accounts payable are paid on average...

P151 Cash conversion cycle American Products is concerned about managing cash efficiently. On average, inventories have an age of 80 days, and accounts receivable are collected in 40 days. Accounts...

P151 CASH CONVERSION CYCLE American Products is concerned about managing cash efficiently. On average, inventories have an age of 80 days, and accounts receivable are collected in 40 days. Accounts...

Alexandria Products is concerned about managing cash efficiently. On average, inventories have an age of 90 days, and accounts receivable are collected in 60 days. Accounts payable are paid...

P141 Cash conversion cycle American Products is concerned about managing cash efficiently. On the average, inventories have an age of 90 days, and accounts receivable are collected in 60 days....

Question 30 (2 points) Apply the following information to answer the next 3 questions (Q30, Q31, and Q32): Nanaimo Products is concerned about managing cash efficiently. On average, inventories have...

| American Products is concerned about managing cash efficiently. On average, inventories have an age of 120 days, and accounts receivables are collected in 90 days. Accounts payable are paid on...

P15-1 Cash conversion cycle American Products is concerned about managing cash efficiently. On average, inventories have an age of 80 days, and accounts receivable are collected in 40 days. Accounts...

Refer to the trend-adjusted exponential smoothing Illustration in Example 7 on pages 149-150. Using = .2 and = .4, we forecast sales for 0 months, showing the detailed calculations for months 2 and...

Suppose the standard deviation of the coefficient of friction in Prob. 165 is = 0.025, where the deviation from the mean is due entirely to environmental conditions. Find the brake torques...

I need to finish this code in Fortran, the code calculates the inverse matrix of a 4 x 4 matrix that reads from the data.dat file, this can be anything. I need to implement the two subroutines that...

Enhance the basic quality of your voice.

Describe the features of and process used by a writing team.

Identify the components of interpersonal communication and soft skills.