(Cash conversion cycle) Historical data for the firm's sales, accounts receivable, inventories, and accounts payable for the Crimson Mfg. Company follow: a. Calculate Crimson's days of sales outstanding, days of payables outstanding, and days of sales in inventory for each of the 5 years. (Assume a 365-day year. Hint. Assume that the firm's cost of goods sold equals 70% of sales.) What has Crimson accomplished in its atempts to better manage its investments in account receivable and inventory? b. Calculate Crimson's cash conversion cycle for each of the 5 years. Evaluate the firm's overall management of its working capital. Assume a 365-day year. a. Calculate Crimson's days of sales outstanding, days of payables outstanding, and days of sales in inventory for each of the 5 years. Assume a 365-day year. Hint: Assume that the firm's cost of goods sold equals 70% of sales. (Round to two decimal places.) Days of sales outstanding (DSO) Data table Sales Net Receivables-Total Acounts payable Inventories-Total 2014 428 335 (Click on the following icon in order to copy its contents into a spreadsheet.) 2014 4,341 613 2015 ■ 2015 5,263 810 679 455 2016 ☐ 2016 7,983 1,090 685 651 2017 11,694 1,314 1,549 360 2017 0 2018 18,413 2,254 2,469 342 2018 ☐ - X
(Cash conversion cycle) Historical data for the firm's sales, accounts receivable, inventories, and accounts payable for the Crimson Mfg. Company follow: a. Calculate Crimson's days of sales outstanding, days of payables outstanding, and days of sales in inventory for each of the 5 years. (Assume a 365-day year. Hint. Assume that the firm's cost of goods sold equals 70% of sales.) What has Crimson accomplished in its atempts to better manage its investments in account receivable and inventory? b. Calculate Crimson's cash conversion cycle for each of the 5 years. Evaluate the firm's overall management of its working capital. Assume a 365-day year. a. Calculate Crimson's days of sales outstanding, days of payables outstanding, and days of sales in inventory for each of the 5 years. Assume a 365-day year. Hint: Assume that the firm's cost of goods sold equals 70% of sales. (Round to two decimal places.) Days of sales outstanding (DSO) Data table Sales Net Receivables-Total Acounts payable Inventories-Total 2014 428 335 (Click on the following icon in order to copy its contents into a spreadsheet.) 2014 4,341 613 2015 ■ 2015 5,263 810 679 455 2016 ☐ 2016 7,983 1,090 685 651 2017 11,694 1,314 1,549 360 2017 0 2018 18,413 2,254 2,469 342 2018 ☐ - X
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:## Cash Conversion Cycle Analysis
### Historical data for the firm's sales, accounts receivable, inventories, and accounts payable for Crimson Manufacturing Company
#### Task:
a. Calculate Crimson's days of sales outstanding (DSO), days of payables outstanding, and days of sales in inventory for each of the 5 years. Assume a 365-day year. **Hint:** Assume that the firm's cost of goods sold equals 70% of sales.
b. Calculate Crimson's cash conversion cycle for each of the 5 years. Evaluate the firm’s overall management of its working capital. Assume a 365-day year.
#### Calculation Table:
Calculate Crimson's days of sales outstanding, days of payables outstanding, and days of sales in inventory for each of the 5 years. Use a 365-day year. **Hint:** Assume that the firm's cost of goods sold equals 70% of sales. (Round to two decimal places.)
##### Data Table:
- **2014**
- Sales—Net: 4,341
- Receivables—Total: 613
- Accounts Payable: 428
- Inventories—Total: 335
- **2015**
- Sales—Net: 5,263
- Receivables—Total: 810
- Accounts Payable: 679
- Inventories—Total: 455
- **2016**
- Sales—Net: 7,983
- Receivables—Total: 1,090
- Accounts Payable: 685
- Inventories—Total: 651
- **2017**
- Sales—Net: 11,694
- Receivables—Total: 1,314
- Accounts Payable: 1,549
- Inventories—Total: 360
- **2018**
- Sales—Net: 18,413
- Receivables—Total: 2,254
- Accounts Payable: 2,469
- Inventories—Total: 342
Interactive feature: Click on the icon within the interface to copy the data contents to a spreadsheet for further analysis.
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