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Negus Enterprises has an inventory conversion period of 50 days, an average collection period of 35 days, and payables deferral period of 25 days. Assume that the costs of goods sold are 80% of its sales. a) What is the length of the firm's cash conversion cycle? b) If Negus's annual sales are $4,380,000 and all sales are on credit, what is the firm's investment in accounts receivable? c) How many times per year does Negus Enterprises turn over its inventory?

Negus Enterprises has an inventory conversion period of 50 days, an average collection period of 35 days, and payables deferral period of 25 days. Assume that the costs of goods sold are 80% of its sales. a) What is the length of the firm's cash conversion cycle? b) If Negus's annual sales are $4,380,000 and all sales are on credit, what is the firm's investment in accounts receivable? c) How many times per year does Negus Enterprises turn over its inventory?

Corporate Fin Focused Approach
Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter16: Supply Chains And Working Capital Management
Section: Chapter Questions
Problem 11P
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Negus Enterprises has an inventory conversion period of 50 days, an average collection period of 35 days, and payables deferral period of 25 days. Assume that the costs of goods sold are 80% of its sales. a) What is the length of the firm's cash conversion cycle? b) If Negus's annual sales are $4,380,000 and all sales are on credit, what is the firm's investment in accounts receivable? c) How many times per year does Negus Enterprises turn over its inventory?
Transcribed Image Text:Negus Enterprises has an inventory conversion period of 50 days, an average collection period of 35 days, and payables deferral period of 25 days. Assume that the costs of goods sold are 80% of its sales. a) What is the length of the firm's cash conversion cycle? b) If Negus's annual sales are $4,380,000 and all sales are on credit, what is the firm's investment in accounts receivable? c) How many times per year does Negus Enterprises turn over its inventory?
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