Question

What is the cash-to-cash cycle time for this data set? (Choose the best answer.) Sales over...

What is the cash-to-cash cycle time for this data set? (Choose the best answer.) Sales over the past 180 days Current accounts receivable balance Cost of sales (%) Current value of inventory (total) Current accounts payable balance $1,500,000 $250,000 45% $750,000 $400,000 80 days 100 days 120 days 140 days

Homework Answers

Answer #1

Answer: 120 Days

Cash to Cash Cycle = Days of receivables outstanding + Days of inventory outstanding -Days of Payables outstanding

Days of Receivables Outstanding = Average Accounts Receivables * (365/Revenue) = 250000*(180/1500000) = 30 days

Average Inventory Period = Average of Inventory *(365 days / COGS) = 750000*(180/675000) = 200

Days of Payables Period = Average Payables *(180/COGS ) = 400000*(180/675000) = 107 days

Cash to Cash Cycle = 30+200-107 = 123 = 120 days ( Nerest value)

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