Understanding Receivables: ABC sells on credit terms of 2/10, n/30. Daily sales average 200 units at P2,500 each throughout the 365-day year. All sales  are on credit. On average, 40% take the cash discount by paying on tenth day while the remaining 60% pay on the 30th day. It is planning to change the credit terms to 2/10, n/25. If this change was done, daily sales will be 180 units. Around 45% will  pay on the tenth day while the remaining 55% will pay on the 25th day. What is the original average accounts receivable balance based on the given? What is the original average collection period of the receivables in days? What is the original receivable turnover? Round off to two decimal places. What will be the new average accounts receivable balance based on the given? What will be the new average collection period of the receivables in days? What will be the new receivable turnover? Round off to two decimal places.

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Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.