Negus Enterprises has an inventory conversion period of 50 days, an average collection period of 35 days, and a payables deferral period of 25 days. Assume that cost of goods sold is 80% of sales. What is the length of the firm’s cash conversion cycle? If annual sales are $4,380,000 and all sales are on credit, what is the firm’s investment in accounts receivable? how many times per year does Negus Enterprises turn over its inventory?
Negus Enterprises has an inventory conversion period of 50 days, an average collection period of 35 days, and a payables deferral period of 25 days. Assume that cost of goods sold is 80% of sales.
What is the length of the firm’s cash conversion cycle?
If annual sales are $4,380,000 and all sales are on credit, what is the firm’s investment in accounts receivable?
how many times per year does Negus Enterprises turn over its inventory?
The cash conversion cycle is a tool that is used by the companies to find the number of days required to convert the company's input resource into cash inflows. The formula to calculate the cash conversion cycle is as follows:
Cash conversion cycle = Inventory conversion period + Average collection period —Payables deferral period
Investment in accounts receivables means the average amount of receivables The formula to calculate the average amount of receivables is as follows:
Average amount Of receivables Credit sales for one day x Days sales outstanding
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