Based on the following financial statement information, what is the cash cycle? Interpret. Item Beginning Ending Inventory 15,000 25.000 Accounts recelvable 14.500 10,000 Accounts payable 15.400 12,000 Credit sales RO 120.000 Cost of goods sald (COCS) 50% of credit sales

Based on the following financial statement information, what is the cash cycle? Interpret. Item Beginning Ending Inventory 15,000 25.000 Accounts recelvable 14.500 10,000 Accounts payable 15.400 12,000 Credit sales RO 120.000 Cost of goods sald (COCS) 50% of credit sales

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter11: The Statement Of Cash Flows

Section: Chapter Questions

Problem 13MCQ

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Question

Based on the following financial statement information, what is the cash cycle? Interpret.
Item
Beginning Ending
Inventory
15,000
25.000
Accounts recelvable
14.500
10,000
Accounts payable
15.400
12,000
Credit sales
RO 120.000
Cost of goods sald (COCS)
50% of credit sales

Expert Solution

Step 1

$c a s h c o v e r s i o n d a y s = d s o + d i o - d p o = \frac{365 \times A V G A R}{S A L E S} + \frac{365 \times A V G I N V E N T O R Y}{C O G S} - \frac{365 \times A V G A P}{S A L E S}$

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