Question

The following table shows income statement and balance sheet data for five U.S. industries in 2017....

The following table shows income statement and balance sheet data for five U.S. industries in 2017.

INCOME STATEMENT AND BALANCE SHEET FOR 2017
SELECTED U.S. INDUSTRIES FOR 2017
(Figures in $ billions)
Food Pharmaceuticals Oil
and Coal		 Computers and
Peripherals		 Food
Stores
Income Statement Data:
Sales $ 683.9 $ 444.5 $ 819.0 $ 233.0 $ 491.2
Cost of goods sold 613.1 369.4 774.8 223.7 468.0
Balance Sheet Data:
Inventory $ 84.8 $ 73.8 $ 61.2 $ 28.3 $ 44.9
Accounts receivable 73.6 85.1 69.8 40.7 24.4
Accounts payable 66.0 59.3 67.3 90.5 40.7

Note: Cost of goods sold includes selling, general, and administrative expenses.

Source: U.S. Department of Commerce, Quarterly Financial Report for Manufacturing, Mining, Trade Corporations, and Selected Service Industries, Quarter 3, issued December 2017.

Calculate the cash cycle for each industry. (Negative amounts should be indicated by a minus sign. Use 365 days a year. Do not round intermediate calculations. Round your answers to 1 decimal place.)

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Answer #1

Cash Conversion Cycle =Average Inventory days + Days of Account Receivable -Days of Account Payable
Cash Conversion Cycle=365/(Cogs/Inventory)+365/(Sales/Account Receivable)-365/(Cogs/Accounts Payables)

Cash Cycle foods =365/(613.1/84.8)+365/(683.9/73.6)-365/(613.1/66) =50.5
Cash Cycle Pharmaceuticals =365/(369.4/73.8)+365/(444.5/85.1)-365/(369.4/59.3) = 84.2
Cash Cycle Oil and Coal =365/(774.8/61.2)+365/(819.0/69.80)-365/(774.8/67.3) =28.2
Cash Cycle Pharmaceuticals =365/(223.7/28.3)+365/(233.0/40.7)-365/(223.7/90.5) =-37.7
Cash Cycle Food Stores =365/(468.0/44.9)+365/(491.2/24.4)-365/(468.0/40.7) =21.41​​​​​​

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