Selected ratios and sales information for ABC Toy Co. (a small start-up company)

Question

Selected ratios and sales information for ABC Toy Co. (a small start-up company) are shown below:

20Y3

20Y2

66.8

75.4

34.7

38.4

37.5

31.2

$500

$470

Calculate the following. Round answers to one decimal point.

1. ABC Toy Co.'s Cash conversion cycle:

for 20Y3:  days        for 20Y2:  days

2. How many days, on average, did ABC Toy Co. have to wait between when ABC paid its vendors for products it purchased for resale and when ABC collected from customers for the products they purchased?

in 20Y3:  days        in 20Y2:  days       

3. On average, how much less working capital did ABC Toy Co. need to carry in 20Y3 than in 20Y2?  dollars

20Y3

20Y2

Number of Days' Sales in Inventory

66.8

75.4

Number of Days' Sales in Receivables

34.7

38.4

Days Payables Outstanding

37.5

31.2

Average Daily Sales

$500

$470

Explanation / Answer

Cash conversion cycle = Days inventory outstanding + Days receivable Outstanding - Days Payble Outstanding

It means it takes ABS toy  Co. 64 days & 82.6 days respectively in 20Y3 and 20Y2 from paying for his inventory to receive the cash from its sale.

20Y3 20Y2 Days Inventory Outstanding 66.8 75.4 Days Sales Outstanding 34.7 38.4 Days payble outstanding 37.5 31.2 Cash Conversion Cycle 64.0 82.6

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.