Shulman inc. has the following data, in thousands. assuming a 365-day year, what is the firm's cash conversion cycle?

annual sales = $45,000
annual cost of goods sold = $30,000
inventory = $4,500
accounts receivable = $1,800
accounts payable = $2,500

a. 28 days
b. 32 days
c. 35 days
d. 39 days
e. 43 days

Option (D) is correct.

Explanation:

Inventory conversion period:

= (365 days × Inventory) ÷ Cost of goods sold

= (365 days × 4,500) ÷ 30,000

= 54.75

Average collection period:

= (365 days × Accounts receivable) ÷ sales

= (365 days × $1,800) ÷ 45,000

= 14.60

Payable deferral period:

=  (365 days × Accounts payable) ÷ COGS

= (365 days × $2,500) ÷ 30,000

= 30.42

cash conversion cycle:

= Inventory conversion period + Average collection period - Payable deferral period

= 54.75 + 14.60 - 30.42

= 38.93 or 39 days

answer; operating revenues;

answer; closing the loop;