QUESTION 1From Chapter 14:Balloon Payment Financial (BPF) has an inventory conversion period of 45 days, a receivables collection period of 30 days, and a payables deferral period of 15 days.(a) What is the length of the firm’s cash conversion cycle?(b) If BPF’s annual sales are $2.7 million and all sales are on credit, what is the average balance in accounts receivable?(c) How many times per year does BPF turn over its inventory?(d) What would happen to BPF’s cash conversion cycle if, on average, inventories could be turned over 12 times a year?

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Answered: Balloon Payment Financial (BPF) has an…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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QUESTION 1

From Chapter 14:

Balloon Payment Financial (BPF) has an inventory conversion period of 45 days, a receivables collection period of 30 days, and a payables deferral period of 15 days.

(a) What is the length of the firm’s cash conversion cycle?

(b) If BPF’s annual sales are $2.7 million and all sales are on credit, what is the average balance in accounts receivable?

(c) How many times per year does BPF turn over its inventory?

(d) What would happen to BPF’s cash conversion cycle if, on average, inventories could be turned over 12 times a year?

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