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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?

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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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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