Question

QUESTION 1

1. ABC Corporation currently has an inventory turnover of 5.05, a payables turnover of 24.95, and a receivables turnover of 11.09. How many days are in the cash cycle?

Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

QUESTION

1. As of this morning, your firm had a ledger balance of $4,894 with no outstanding deposits or checks. Today, your firm deposited 5 checks in the amount of $234 each and wrote 6 checks in the amount of $958 each. What is the amount of the disbursement float as of the end of the day?

Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

  

QUESTION

1. ABC Company has annual sales of $483,743 and cost of goods sold of $198,600. The average accounts receivable balance is $116,776. How many days on average does it take the firm to collect its accounts receivable? Assume 365 days.

Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

QUESTION

1. Compute the cash cycle based on the following information: 55

Average Collection Period = 60

Accounts Payable Period = 45

Average Age of Inventory = 42

Answer 1

Q1) Days of inventory held = 365/Inventory Turnover = 365/5.05 = 72.277 days

Average collection period = 365/receivables turnover = 365/11.09 = 32.912 days

Average payment period = 365/payables turnover = 365/24.95 = 14.629 days

Cash Conversion cycle = Days of inventory held + Average collection period - Average payment period

= 72.277 + 32.912 - 14.629

= 90.56 days

Q2) Disbursement float = total amount of checks written = 958*6 = $5748

Q3) Average collection period = 365/(Sales/Average accounts receivables) = 365/(483743/116776) = 88.11 days

Q4) Cash Conversion cycle = Days of inventory held + Average collection period - Average payment period

= 42 + 60 -45 = 57 days