Santana Rey’s two departments, Computer Consulting Services and Computer Workstation Furniture Manufacturing, have each been profitable for Business Solutions. Santana has heard of the cash conversion cycle and wants to use it as another performance measure for the workstation manufacturing department. Data below are for the most recent two quarters. 1st Quarter 2nd Quarter Days’ sales in accounts receivable . 19 days 21 days Days’ sales in inventory . 25 days 24 days Days’ payable outstanding 31 days 28 days Required 1. Compute the cash conversion cycle for the first quarter. 2. Compute the cash conversion cycle for the second quarter. 3. Did the cash conversion cycle increase or decrease from the first to the second quarter?
Santana Rey’s two departments, Computer Consulting Services and Computer Workstation
Furniture Manufacturing, have each been profitable for Business Solutions. Santana has heard of the cash
conversion cycle and wants to use it as another performance measure for the workstation manufacturing
department. Data below are for the most recent two quarters. 1st Quarter 2nd Quarter
Days’ sales in
Days’ sales in inventory . 25 days 24 days
Days’ payable outstanding 31 days 28 days Required
1. Compute the cash conversion cycle for the first quarter.
2. Compute the cash conversion cycle for the second quarter.
3. Did the cash conversion cycle increase or decrease from the first to the second quarter?
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