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    Cash Conversion, cost of trade credit, commercial paper

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    5. Given the following data:
    Days inventory = 103 days, Days receivables = 41 days, and Days payables = 81 days
    Calculate the cash conversion cycle and operating cycle.

    6. Calculate the cost of trade credit given terms of 3/20 net 60.

    7. A firm issues $1,000,000 of commercial paper with a maturity of 60 days and a discount rate of 5%. The paper is sold through a dealer who charges 0.25%. What is the effective cost of issuing the commercial paper?

    © BrainMass Inc. brainmass.com June 3, 2020, 11:13 pm ad1c9bdddf
    https://brainmass.com/economics/trade-agreements/cash-conversion-cost-of-trade-credit-commercial-paper-268984

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    5. Given the following data:
    Days inventory = 103 days,  Days receivables = 41 days, and  Days payables   =  81 days
    Calculate the cash conversion cycle  and operating cycle.

    Cash Conversion Cycle = Days inventory + Days receivable- Days payables= 63 days =103+41-81
    Operating Cycle = Days inventory + Days receivable= 144 days =103+41

    Answer:
    Cash Conversion Cycle = 63 days
    Operating Cycle = 144 days

    6. Calculate the cost of trade  credit   given terms of  3/20 net 60.

    Terms 3/20 net ...

    Solution Summary

    Answers 3 questions on Cash Conversion cycle, cost of trade credit, commercial paper.

    $2.19

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