Question

# Negus Enterprises has an inventory conversion period of 62 days, an average collection period of 45...

Negus Enterprises has an inventory conversion period of 62 days, an average collection period of 45 days, and a payables deferral period of 20 days. Assume that cost of goods sold is 80% of sales. Assume 365 days in year for your calculations. What is the length of the firm's cash conversion cycle? days

If Negus's annual sales are \$3,824,775 and all sales are on credit, what is the firm's investment in accounts receivable? Round your answer to the nearest dollar. Do not round intermediate calculation.

\$ How many times per year does Negus Enterprises turn over its inventory? Round your answer to two decimal places. Do not round intermediate calculation. x

1

 Operating cycle = days of sales outstanding + days of inventory on hand Operating cycle = 45+62 Operating cycle = 107 Cash conversion cycle = Operating cycle - days of payables outstanding Cash cycle = 107-20 Cash cycle = 87

2

 days of sales outstanding = number of days in a year/receivables turnover 45 = 365/Receivables turnover Receivables turnover = 8.11
 Receivables turnover = Credit sales/receivables 8.11 = 3824775/Receivables Receivables = 471612.21

3

 days of inventory on hand = number of days in a year/inventory turnover 62 = 365/inventory turnover inventory turnover = 5.89