Answered: Calculate Cruiseʹs Cash Conversion…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 103.1C: Leverage Cook Corporation issued financial statements at December 31, 2019, that include the...

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The balance sheet and income statement for Cruise Corporation are as follows:
                                                Balance Sheet as of December 31, 2020

ASSETS                                                                         LIABILITIES & EQUITY
            Cash & marketable securities $2,000             Accounts payable                    $30,000
            Accounts Receivable               35,000             Taxes payable                         9,000
            Inventory                                 15,000             Short-term borrowings           12,000
            Total current assets                $52,000           Total current liabilities           $51,000
            Net P,P & E                              $448,000         Long-term debt                       $200,000
            TOTAL ASSETS                         $500,000         Total liabilities                        $251,000
                                                                                    Common stock at par             $80,000
                                                                                    Additional paid-in capital       $30,000
                                                                                    Retained earnings                   $139,000
                                                                        TOTAL LIABILITIES & EQUITY              $500,000

                                    Income Statement for the year ending December 31, 2020
            Sales                            $800,000
            Cost of goods sold       560,000
            Gross profit                 $240,000
            S, G & A                       100,000
            Operating profit          $140,000
            Interest expense         11,660
            Earnings b4 tax           $128,340
            Income tax                  39,785
            Net Income                 $88,555

Cruiseʹs stock was selling for $7 a share at the end of 2020, and there were 95 thousand shares outstanding. Cruise paid dividends of $0.05 a share in 2020          . Calculate Cruiseʹs Cash Conversion Cycle for 2020.

Group of answer choices

26 days

6 days

-4 days

45 days

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