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Operating and cash conversion cycles

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Consider the attached financial statement information for the Zamboni Icers Corporation.
Item Beginning Ending
Inventory $8,257.00 $10,432.00
Accts Receivable $5,275.00 $5,963.00
Accts Payable $7,685.00 $7,900.00
Net Sales $65,327.00
Cost of goods sold $51,284.00

Calculate the operating and cash cycles. How do you interpret your answer?

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Solution Summary

Operating and cash conversion cycles are calculated for the data provided for Zamboni Icers Corporation.

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The solution is in the attached excel sheet where formatting is maintained.

Item Beginning Ending
Inventory $8,257.00 $10,432.00
Accts Receivable $5,275.00 $5,963.00
Accts Payable $7,685.00 $7,900.00
Net Sales $65,327.00
Cost of goods sold $51,284.00

Assume 365 days year
Average inventory=(Beginning + Ending)/2= $9,344.50
...

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