Question

19. CME Group Inc has the following data: Annual sales = $59,000, Annual cost of goods...

19. CME Group Inc has the following data: Annual sales = $59,000, Annual cost of goods sold = $44,250, Inventory = $8,260, Accounts receivable = $5,310, and Accounts payable = $5,900. What is the firm's cash conversion cycle?

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52

104

76

30

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Answer #1

Answer = 52

Note:

Inventory Turnover =  Cost of Goods Sold/ Inventory

= $ 44250/8260

=5.357142857142860

Now, Inventory Period = Number of Days in a Year / Inventory Turnover

= 365/ 5.357142857142860

= 68.133333 days

Receivables Turnover = Credit Sales/ Receivables

= $ 59000/5310

= 11.111111

Receivables Period = Number of days in a year / Receivables Turnover

= 365/11.111111

= 32.85 Days

Payable Turnover= Cost of Goods Sold / Payable

= $ 44250/5900

= 7.5

Payable Period = Number of Days in a Year / Payable Turnover

= 365/7.5

= 48.67 Days

Operating Cycle = Inventory Period + Receivables Period

= 68.133 days+32.85 Days

= 100.98 days

Cash Cycle = Operating Cycle - Payable Period

= 100.98 days - 48.67 Days

= 52.32 Days

= 52

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