Chapter 19, Problem 6P

The Greek Connection had sales of $32 million in 2015, and a cost of goods sold of $20 million. A simplified balance sheet for the firm appears below:

a. Calculate The Greek Connection’s net working capital in 2015.
b. Calculate the cash conversion cycle of The Greek Connection in 2015.
c. The industry average accounts receivable days is 30 days. What would have been the cash conversion cycle for The Greek Connection in 2015 had it matched the industry average for accounts receivable days (see MyFinanceLab for the data in Excel format)?

The Greek Connection

Balance Sheet as of December 31, 2015

(thousands of dollars)

Assets
Cash	$2,000	Accounts payable	$1,500
Accounts receivable	3,950	Notes payable	1,000
Inventory	1,300	Accruals	1,220
Total current assets	$7,250	Total current liabilities	$3,720
Net plant, property, and equipment	8,500	Long-term debt	$3,000
		Total liabilities	$6,720
Total assets	$15,750	Common equity	$9,030
		Total liabilities and equity	$15,750