Zane Corporation has an inventory conversion period of 64 days,an average collection period of 28 days, and a payables deferral period of 41 days.a. What is the length of the cash conversion cycle?b. If Zane’s annual sales are $2,578,235 and all sales are on credit, what is the investmentin accounts receivable?c. How many times per year does Zane turn over its inventory? Assume that the cost ofgoods sold is 75% of sales. Use sales in the numerator to calculate the turnover ratio.
Zane Corporation has an inventory conversion period of 64 days,an average collection period of 28 days, and a payables deferral period of 41 days.a. What is the length of the cash conversion cycle?b. If Zane’s annual sales are $2,578,235 and all sales are on credit, what is the investmentin accounts receivable?c. How many times per year does Zane turn over its inventory? Assume that the cost ofgoods sold is 75% of sales. Use sales in the numerator to calculate the turnover ratio.
Chapter16: Supply Chains And Working Capital Management
Section: Chapter Questions
Problem 11P
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Zane Corporation has an inventory conversion period of 64 days,
an average collection period of 28 days, and a payables deferral period of 41 days.
a. What is the length of the cash conversion cycle?
b. If Zane’s annual sales are $2,578,235 and all sales are on credit, what is the investment
in accounts receivable?
c. 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.
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