Answered: On average your firm sells $33,100 of…

On average your firm sells $33,100 of items on credit each day. Your average inventory period is 35 days and your operating cycle is 55 days. What is your average accounts receivable balance?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 3P

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Concept explainers

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.

Question

On average your firm sells $33,100 of items on credit each day. Your average inventory period is 35 days and your operating cycle is 55 days. What is your average accounts receivable balance?

Definition Definition Money that the business will be receiving from its clients who have utilized the credit provided to buy its goods and services. The credit period typically lasts for a short term, lasting from a few days, a few months, to a year.

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