Multiple Choice-Working Capital
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Cold Chiller Corporation (CCC) has annual sales of $10 million, cost of goods sold of 60 percent, average age of inventory of 60 days, average collection period of 35 days, average payment period of 40 days, and purchases that are 50 percent of cost of goods sold. How much does CCC have invested in its cash conversion cycle assuming a 365-day year?
a. $1,287,671
b. $1,657,533.80
c. $1,452,054.50
d. $1,753,424
e. $1,616,438
La Forks of Destiny, Inc., has had an average A/R balance the past 60 days of $800,000. Revenues the last 60 days have totaled $12,000,000 on sales of 1,000,000 units, each with $7 contribution margin. The average collection period for La Forks is __________.
a. 1.7 days
b. 2.0 days
c. 2.3 days
d. 4.0 days
e. 6.25 days
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Solution Summary
Answers to 2 multiple choice questions on working capital- cash conversion cycle, average collection period.
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QUESTION#1
Cold Chiller Corporation (CCC) has annual sales of $10 million, cost of goods sold of 60 percent, average age of inventory of 60 days, average collection period of 35 days, average payment period of 40 days, and purchases that are 50 percent of cost of goods sold. How much does CCC have invested in its cash conversion cycle ...
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