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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 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
...

#### Solution Summary

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

\$2.49