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A manufacturing company has the following financial information: • Annual credit sales = $4,500,000 • • • • Annual cost of goods sold = $2,700,000 Average accounts receivable = $750,000 Average inventory = $600,000 Average accounts payable = $450,000 Raw material costs represent 60% of the cost of goods sold • Credit sales account for 75% of total sales Calculate the company's cash operating cycle (cash conversion cycle) in days.

A manufacturing company has the following financial information: • Annual credit sales = $4,500,000 • • • • Annual cost of goods sold = $2,700,000 Average accounts receivable = $750,000 Average inventory = $600,000 Average accounts payable = $450,000 Raw material costs represent 60% of the cost of goods sold • Credit sales account for 75% of total sales Calculate the company's cash operating cycle (cash conversion cycle) in days.

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter21: Supply Chains And Working Capital Management
Section: Chapter Questions
Problem 3MC
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Financial Accounting

A manufacturing company has the following financial information: • Annual credit sales = $4,500,000 • • • • Annual cost of goods sold = $2,700,000 Average accounts receivable = $750,000 Average inventory = $600,000 Average accounts payable = $450,000 Raw material costs represent 60% of the cost of goods sold • Credit sales account for 75% of total sales Calculate the company's cash operating cycle (cash conversion cycle) in days.
Transcribed Image Text:A manufacturing company has the following financial information: • Annual credit sales = $4,500,000 • • • • Annual cost of goods sold = $2,700,000 Average accounts receivable = $750,000 Average inventory = $600,000 Average accounts payable = $450,000 Raw material costs represent 60% of the cost of goods sold • Credit sales account for 75% of total sales Calculate the company's cash operating cycle (cash conversion cycle) in days.
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