Cash management is a very important function of managers. Companies need to manage their operations in

Cash management is a very important function of managers. Companies need to manage their operations in

 

 

answer:

cash conversion cycle = days inventory outstanding + days sales outstanding – days payable outstanding.
Days Inventory Outstanding = (Inventory /Cost of Sales )*365
a) Days Inventory Outstanding =[ $2,700,000/(80% x $29,000,000)] 42.48 Days
Days Sales Outstanding = (Accounts Receivables/Sales)*365
b) Days Sales Outstanding = ($1,900,000/$29,000,000)*365 23.91 Days
Days Payable outstanding = (Accounts Payable/ cost of Sales)*365
c) Days Payable outstanding = ($2,400,000/(80% x $29,000,000)*365 37.76 Days
d) Cash conversion Cycle = 42.48 + 23.91 – 37.76 days 28.63 Days
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