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Luke Company has an-inventory conversion period of 60 days, a receivables conversion period of 45 days, and a payments cycle of 30 days. What is the length of the firm's cash conversion cycle? 90 days А. В. 75 days C. 54 days D. 105 days

Luke Company has an-inventory conversion period of 60 days, a receivables conversion period of 45 days, and a payments cycle of 30 days. What is the length of the firm's cash conversion cycle? 90 days А. В. 75 days C. 54 days D. 105 days

Corporate Fin Focused Approach
Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter16: Supply Chains And Working Capital Management
Section: Chapter Questions
Problem 11P
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Luke Company has an inventory conversion period of 60 days, a receivables conversion period of 45 days, and a payments cycle of 30 days. What is the length of the firm's cash conversion cycle? 90 days B. 75 days A. 54 days D. 105 days C. Samaritan Supplies, Inc. has P5 million in inventory and P2 million in accounts receivable. Its average daily sales are P100,000. The company has P1.5 million in accounts payable. Its average daily purchases are P50,000. What is the length of the company's inventory conversion period? A. 50 days B. 90 days C. 120 days D. 40 days Using the information in the last question, what is the length of the company's cash conversion period? A. 50 days B. 20 days C. 30 days D. 40 days Julia Company has P5 millioh of average inventory and sales of P30 million. Using a 365-day year, calculate the firm's inventory conversion period. A. 30.25 days B. 45.00 days C. 60.83 days D. 72.44 days
Transcribed Image Text:Luke Company has an inventory conversion period of 60 days, a receivables conversion period of 45 days, and a payments cycle of 30 days. What is the length of the firm's cash conversion cycle? 90 days B. 75 days A. 54 days D. 105 days C. Samaritan Supplies, Inc. has P5 million in inventory and P2 million in accounts receivable. Its average daily sales are P100,000. The company has P1.5 million in accounts payable. Its average daily purchases are P50,000. What is the length of the company's inventory conversion period? A. 50 days B. 90 days C. 120 days D. 40 days Using the information in the last question, what is the length of the company's cash conversion period? A. 50 days B. 20 days C. 30 days D. 40 days Julia Company has P5 millioh of average inventory and sales of P30 million. Using a 365-day year, calculate the firm's inventory conversion period. A. 30.25 days B. 45.00 days C. 60.83 days D. 72.44 days
Problem 4 (The Operating and Cash Cycles) Consider the following financial statement information for Avocado Company. Item Beginning Ending Inventory Accounts receivable Aocounts payable Net sales Cost of goods sold P1,273 3,872 1,795 P1,401 3,368 2,025 P14,750 11,375 Calculate the operating and cash cycles.
Transcribed Image Text:Problem 4 (The Operating and Cash Cycles) Consider the following financial statement information for Avocado Company. Item Beginning Ending Inventory Accounts receivable Aocounts payable Net sales Cost of goods sold P1,273 3,872 1,795 P1,401 3,368 2,025 P14,750 11,375 Calculate the operating and cash cycles.
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