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(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

FINANCIAL ACCOUNTING
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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## 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.
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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