AC Corporation has beginning inventory of $11,062, accounts payable of $8,010, and accounts receivable of $7,844. The end of year values are $11,362 for inventory, $7,898 for accounts payable, and $8,029 for accounts receivable. Net sales are $109,100 and costs of goods sold are $56,220. How many days are in the cash cycle?

Question

Quizplus · Accepted Answer

The cash cycle is the number of days it takes a company to convert its inventory into cash. It is calculated by dividing the average inventory by the cost of goods sold and multiplying by 365 days. In this case, the average inventory is ($11,062 + $11,362) / 2 = $11,212. The cost of goods sold is $56,220. Therefore, the cash cycle is ($11,212 / $56,220) * 365 days = 47.7 days.

AC Corporation Has Beginning Inventory of $11,062, Accounts Payable of $8,010