Cash Conversion Cycle: What are the levels of accounts receivable & accounts payable shown on the balance sheet? What is the company's cash conversion?
A company has credit sales of $6 million annually and purchases $3 million from its suppliers. The company receives credit terms of 1/10, net 40 from its suppliers and extends credit terms of 2/10, n30 to its customers. The company takes the discount and pays its suppliers on day 10. On average, the company's customers pay on