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The Zocco Corporation has an inventory conversion period of 60 days, an average collection period of 38 days, and a payables deferral period of 30 days. Assume that cost of goods sold is 75% of sales. a. What is the length of the firm's cash conversion cycle? b. If Zocco's annual sales are $3,421,875 and all sales are on credit, what is the firm's investment in accounts receivable? c. How many times per year does Zocco turn over its inventory?

The Zocco Corporation has an inventory conversion period of 60 days, an average collection period of 38 days, and a payables deferral period of 30 days. Assume that cost of goods sold is 75% of sales. a. What is the length of the firm's cash conversion cycle? b. If Zocco's annual sales are $3,421,875 and all sales are on credit, what is the firm's investment in accounts receivable? c. How many times per year does Zocco turn over its inventory?

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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The Zocco Corporation has an inventory conversion period of 60 days, an average collection period of 38 days, and a payables deferral period of 30 days. Assume that cost of goods sold is 75% of sales. a. What is the length of the firm's cash conversion cycle? b. If Zocco's annual sales are $3,421,875 and all sales are on credit, what is the firm's investment in accounts receivable? c. How many times per year does Zocco turn over its inventory?
Transcribed Image Text:The Zocco Corporation has an inventory conversion period of 60 days, an average collection period of 38 days, and a payables deferral period of 30 days. Assume that cost of goods sold is 75% of sales. a. What is the length of the firm's cash conversion cycle? b. If Zocco's annual sales are $3,421,875 and all sales are on credit, what is the firm's investment in accounts receivable? c. How many times per year does Zocco turn over its inventory?
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