American Products is concerned about managing cash efficiently. On average, inventories have an age of 90 days, and accounts receivable are collected in 60 days. Accounts payable are paid approximately 30 days after they arise. The firm’s operating-cycle investments are $30 million per year.Cost of goods sold are $20 million, and purchases are $15 million. a.    Calculate the firm’s operating cycle. b.    Calculate the firm’s cash conversion cycle. c.    Calculate the amount of resources needed to support the firm’s cash conversion cycle.

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Q: Cash conversion cycle American Products is concerned about managing cash efficiently. On the…

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Q: Provide Answer with Calculation

A:

Q: Cash conversion cycle American Products is concerned about managing cash efficiently. On the…

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Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.