Calculate the average collection period, average payment period, inventory turnover period and cash conversion cycle for...

 

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Calculate the average collection period, average payment period, inventory turnover period and cash conversion cycle for the following firm (1 Year = 360 Days): Income statement data: Sales 10000, COGS 9000 Balance sheet data: Inventory 1100, Accounts receivable 400, Accounts payable 600 What effect will all the following activities have on the cash conversion cycle? • the company reduces the level of inventory by 10%, • the company changes the terms of sale and 60% of customers pay after 5 days while the remaining pay after 30 days (with sales on the same level) and • the company has extended its own payment conditions by one week. Calculate the average collection period, average payment period, inventory turnover period and cash conversion cycle for the following firm (1 Year = 360 Days): Income statement data: Sales 10000, COGS 9000 Balance sheet data: Inventory 1100, Accounts receivable 400, Accounts payable 600 What effect will all the following activities have on the cash conversion cycle? • the company reduces the level of inventory by 10%, • the company changes the terms of sale and 60% of customers pay after 5 days while the remaining pay after 30 days (with sales on the same level) and • the company has extended its own payment conditions by one week.

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