Valencia Systems is evaluating changes to its working capital policies to enhance its cash flow cycle. Valencia's sales last year were $150,000 (all on credit), and it earned a net profit of 8%. Its inventory turnover was 6.3425 times during the year, and its DSO was 28 days. Its annual cost of goods sold was $134,500. The firm had fixed assets totalling $35,000. Valencia's payables deferral period is 38 days. Assume 365 days in a year for your calculations. Calculate Valencia's cash conversion cycle. Round your answer to two decimal places.

Valencia Systems is evaluating changes to its working capital policies to enhance its cash flow cycle. Valencia's sales last year were $150,000 (all on credit), and it earned a net profit of 8%. Its inventory turnover was 6.3425 times during the year, and its DSO was 28 days. Its annual cost of goods sold was $134,500. The firm had fixed assets totalling $35,000. Valencia's payables deferral period is 38 days. Assume 365 days in a year for your calculations. Calculate Valencia's cash conversion cycle. Round your answer to two decimal places.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter21: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 12P: Strickler Technology is considering changes in its working capital policies to improve its cash flow...

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