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.

- 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.

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:

Step 3

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

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