ABC has a problem with its cash conversion cycle. Based on ecords, ABC has receivables, inventory and payable turnovers of 3.5, 5.6, and 7.7 times a year. The industry averages for ages f receivables, inventory and payables are 30, 60, and 45 days. Management of which working capital component should ABC rioritize to improve? Final answer must be the suggested ecrease in average age of that aecific compo ent le a if
ABC has a problem with its cash conversion cycle. Based on ecords, ABC has receivables, inventory and payable turnovers of 3.5, 5.6, and 7.7 times a year. The industry averages for ages f receivables, inventory and payables are 30, 60, and 45 days. Management of which working capital component should ABC rioritize to improve? Final answer must be the suggested ecrease in average age of that aecific compo ent le a if
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
![ABC has a problem with its cash conversion cycle. Based on
records, ABC has receivables, inventory and payable turnovers
of 3.5, 5.6, and 7.7 times a year. The industry averages for ages
of receivables, inventory and payables are 30, 60, and 45 days.
Management of which working capital component should ABC
prioritize to improve? Final answer must be the suggested
decrease in average age of that specific component (e.g., if
average age of receivables is to be decreased by 5.33 days,
then final answer must be 5.33. Use 365 days in a year."
answer](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2b242a6a-1bff-4107-a451-aa48938701c0%2F4bdf2e7d-3ff0-4a02-bb54-66e6869557eb%2F07ulcb_processed.jpeg&w=3840&q=75)
Transcribed Image Text:ABC has a problem with its cash conversion cycle. Based on
records, ABC has receivables, inventory and payable turnovers
of 3.5, 5.6, and 7.7 times a year. The industry averages for ages
of receivables, inventory and payables are 30, 60, and 45 days.
Management of which working capital component should ABC
prioritize to improve? Final answer must be the suggested
decrease in average age of that specific component (e.g., if
average age of receivables is to be decreased by 5.33 days,
then final answer must be 5.33. Use 365 days in a year."
answer
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