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    Cash Conversion Cycle: AR period, AP period, inventory period

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    Cash Conversion Cycle. Calculate the accounts receivable period, accounts payable period, inventory period, and cash conversion cycle for the following firm:

    Income statement data:
    Sales 5,000
    Cost of goods sold 4,200
    Balance sheet data:

    See the table in the attachment.

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    Solution Preview

    Accounts receivable period = Average receivables /Sales * 365
    = ((100+120)/2)*365/5000 = 8.03 ...

    Solution Summary

    The solution shows all the calculations that were used to arrive at the correct answers.