Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
12th Edition
ISBN: 9781259144387
Author: Richard A Brealey, Stewart C Myers, Franklin Allen
Publisher: McGraw-Hill Education
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Chapter 29, Problem 1PS
Summary Introduction

To determine: The cash cycle of company E.

Cash cycle is the overall circulation or cycle of cash commences from the payment of raw materials and ends with receipt of cash on goods sold.

Cash cycle=[Inventory holding period+Accounts receivables period Accounts payable period]

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Explanation of Solution

Computation of cash cycle is as follows:

Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate), Chapter 29, Problem 1PS

Therefore, the cash cycle of the company E is 137 days.

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