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Cash Conversion, cost of trade credit, commercial paper

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?

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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.

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