Practical Management Science
Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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The average days account receiveable/ days of inventory?
Company Ajax has the following information from its financial statements
in 2021.
The annual sales revenue was $271 million and we assume that the
company operated for 365 days last year. The accounts receivable (AR)
amounted to $31.8 million and the accounts payable (AP) to $33.2
million. Further from the balance sheet, the inventory is valued at $12.6
million. The cost of sales (COGS/Revenue) is 50%.
Part 1: The average days of accounts receivable is
[Select]
Part 2: The average days of inventory is [Select]
Part 3: The average days of accounts payable is
[ Select ]
Part 4: The cash-to-cash cycle time is [Select]
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Transcribed Image Text:Company Ajax has the following information from its financial statements in 2021. The annual sales revenue was $271 million and we assume that the company operated for 365 days last year. The accounts receivable (AR) amounted to $31.8 million and the accounts payable (AP) to $33.2 million. Further from the balance sheet, the inventory is valued at $12.6 million. The cost of sales (COGS/Revenue) is 50%. Part 1: The average days of accounts receivable is [Select] Part 2: The average days of inventory is [Select] Part 3: The average days of accounts payable is [ Select ] Part 4: The cash-to-cash cycle time is [Select]
Expert Solution
Check Mark
Step 1

Account receivable is the amount that receivable from outstanding at the end of the each business day. Average daily accounts receivable is determined by dividing account receivable by sales revenue.

Formula = Account receivable / Sales revenue *365

Sales revenue  = $271 million

Account receivable  = $31.8 million

Number of days = 365

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