a)
To determine: The length of cash conversion cycle of company B.
a)
Explanation of Solution
Calculation of inventory conversion period:
Therefore, inventory conversion period is 67.4 days.
Calculation of receivables conversion period:
Therefore, receivables conversion period is 30.4 days.
Calculation of length of operating cycle:
Therefore, operating cycle is 97.8 days
Calculation of payables deferral period:
Therefore, payables deferral period is 51.1 days.
Calculation of length of cash conversion cycle:
Therefore, cash conversion cycle is 46.7 days
b)
To determine: Length of the cash conversion cycle.
b)
Explanation of Solution
Calculation of receivables conversion period:
Therefore, receivables conversion period is 40.6 days.
Calculation of length of operating cycle:
Therefore, operating cycle is 108 days
Calculation of length of cash conversion cycle:
Therefore, cash conversion cycle is 56.9 days
c)
To determine: Length of the cash conversion cycle.
c)
Explanation of Solution
Calculation of receivables conversion period:
Therefore, receivables conversion period is 60.9 days.
Calculation of length of operating cycle:
Therefore, operating cycle is 128.3 days
Calculation of length of cash conversion cycle:
Therefore, cash conversion cycle is 77.2 days
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Chapter 16 Solutions
Contemporary Financial Management, Loose-leaf Version
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