Marshall Inc. recently hired your consulting firm to improve the company\'s perf

Question

Marshall Inc. recently hired your consulting firm to improve the company's performance. It has been highly profitable bu has been experiencing cash shortages due to its high growth rate. As one part of your analysis, you want to determine the firm's cash conversion cycle. Using the following information and a 365-day year, what is the firm's present cash conversion cycle?

Average inventoy= 75,000

Annual sales= 600,000

Annual cost of goods sold= 360,000

Average accounts receivable= 160,000

Average accounts payable= 25,000

Explanation / Answer

The formula to calculate Cash Conversion Cycle is: Days of inventory on hand + Days of sales outstanding

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