Desai Inc. has the following data, in thousands. Assuming a 365-day year, what i

Question

Desai Inc. has the following data, in thousands. Assuming a 365-day year, what is the firm's cash conversion cycle?

Annual sales =$45,000
Annual cost of goods sold =$38,000
Inventory =$4,500
Accounts receivable =$1,800
Accounts payable =$2,500

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Bumpas Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 2/15, net 50. If the firm chooses to pay on time but does not take the discount, what is the effective annual percentage cost of its nonfree trade credit? (Assume a 365-day year.)

PLEASE SHOW SOLUTION AND DETAILED ANSWER PLS

Sapp Trucking

Explanation / Answer

a. 28 days
b. 32 days
c. 35 days
d. 39 days
e. 43 days

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