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Zane Corporation has an inventory conversion period of 48 days, an average collection period of 33 days, and a payables deferral period of 33 days. Assume 365 days in year for your calculations.What is the length of the cash conversion cycle? Round your answer to two decimal places.If Zane's annual sales are $4,137,145 and all sales are on credit, what is the investment in accounts receivable? Do not round intermediate calculations. Round your answer to the nearest cent.How many times per year does Zane turn over its inventory? Assume that the cost of goods sold is 75% of sales. Use sales in the numerator to calculate the turnover ratio. Do not round intermediate calculations. Round your answer to two decimal places.

Question

Zane Corporation has an inventory conversion period of 48 days, an average collection period of 33 days, and a payables deferral period of 33 days. Assume 365 days in year for your calculations.

  1. What is the length of the cash conversion cycle? Round your answer to two decimal places.
  2. If Zane's annual sales are $4,137,145 and all sales are on credit, what is the investment in accounts receivable? Do not round intermediate calculations. Round your answer to the nearest cent.
  3. How many times per year does Zane turn over its inventory? Assume that the cost of goods sold is 75% of sales. Use sales in the numerator to calculate the turnover ratio. Do not round intermediate calculations. Round your answer to two decimal places.
check_circleAnswer
Step 1

It is given that

Inventory conversion period is 48 days.

Average collection period is 33 days.

Payables deferral period is 33 days.

Step 2

1.

The formula to calculate cash conversion cycle is given below:

Inventory conversion period
Cash conversion cycle = +Average collection period
-Payable deferral period
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Inventory conversion period Cash conversion cycle = +Average collection period -Payable deferral period

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Step 3

Substitute 48 for inventory conversion period, 33 for average collection...

Cash conversion cycle =48+33-33
48 days
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Cash conversion cycle =48+33-33 48 days

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