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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?

Solution Summary

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

Solution Preview

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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