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Negus Enterprises has an inventory conversion period of 50 days, an average collection period of 35 days, and a payables deferral period of 25 days. Assume that cost of goods sold is 80% of sales. a. What is the length of the firm's cash conversion cycle? b. If Negus' 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 a payables deferral period of 25 days. Assume that cost of goods sold is 80% of sales. a. What is the length of the firm's cash conversion cycle? b. If Negus' 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?

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter22: Providing And Obtaining Credit
Section: Chapter Questions
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Negus Enterprises has an inventory conversion period of 50 days, an average collection period of 35 days, and a payables deferral period of 25 days. Assume that cost of goods sold is 80% of sales. a. What is the length of the firm's cash conversion cycle? b. If Negus' 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 a payables deferral period of 25 days. Assume that cost of goods sold is 80% of sales. a. What is the length of the firm's cash conversion cycle? b. If Negus' 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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