Question

8. Calvani, Inc., has a cash cycle of 44.5 days, an operating cycle of 65 days, and an inventory period of 28 days. The company reported cost of goods sold in the amount of $344,000, and credit sales were $567,000.
  
What is the company’s average balance in accounts payable and accounts receivable? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
  

Average accounts payable	$
Average accounts receivable	$

Answer 1

Cash conversion cycle = Operating cycle - days of payables outstanding

44.5 = 65-days of payables outstanding

days of payables outstanding = 20.5

days of payables outstanding = number of days in a year/accounts payable turnover

20.5 = 365/Accounts payables turnover

Accounts payables turnover = 17.8

Accounts payables turnover = COGS/payables

17.8 = 344000/Payables

Payables = 19325.84

Operating cycle = days of sales outstanding + days of inventory on hand

65 = days of sales outstanding+28

days of sales outstanding = 37

days of sales outstanding = number of days in a year/receivables turnover

37 = 365/Receivables turnover

Receivables turnover = 9.86

Receivables turnover = Credit sales/receivables

9.86 = 567000/Receivables

Receivables = 57505.07