The Garcia Industries balance sheet and income statement for the year ended 2005 are as follows: Income
Question:
Income Statement
(in Millions of Dollars)
Net sales ............... $100.0
Cost of sales ............... 60.0
Selling, general, and administrative expenses ... 20.0
Other expenses ............... 15.0
Earnings after tax ............. 5.0
a. Determine the length of the inventory conversion period.
b. Determine the length of the receivables conversion period.
c. Determine the length of the operating cycle.
d. Determine the length of the payables deferral period.
e. Determine the length of the cash conversion cycle.
f. What is the meaning of the number you calculated in parte?
Cash conversion cycle measures the total time a business takes to convert its cash on hand to produce, pay its suppliers, sell to its customers and collect cash from its customers. The process starts with purchasing of raw materials from suppliers,...
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Related Book For
Contemporary Financial Management
ISBN: 9780324289114
10th Edition
Authors: James R Mcguigan, R Charles Moyer, William J Kretlow
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