Question 1

Based on the following information, determine the venture's cash conversion cycle: inventory-to-sale conversion period = 112.9 days; sale-to-cash conversion period = 57.1 days; and purchase-to-payment conversion period = 76.8 days.
A)170.0 days
B)189.7 days
C)93.2 days
D)133.9 days

Accepted Answer

The answer of Based on the following information, determine the...

Question 2

A major difference exists between a venture's operating cycle and its cash conversion cycle because the conversion cycle includes the time to:
A)buy materials
B)produce a finished good
C)collect sales made on credit
D)pay suppliers for purchases on credit

Accepted Answer

The cash conversion cycle includes the time to pay suppliers for purchases on credit, which is not part of the operating cycle. The operating cycle focuses on the time from buying materials to collecting sales, while the cash conversion cycle accounts for the time taken to pay off suppliers.

Question 3

Based on the following information, determine the average receivables (rounded to thousands of dollars)that were outstanding: net sales = $575,000; sale-to-cash conversion period = 57.1 days; purchase-to-payment conversion period = 76.8 days; and cost of goods sold = $380,000.
A)$90,000
B)$180,000
C)$121,000
D)$45,000

Accepted Answer

The answer of Based on the following information, determine the...

Question 4

A venture's operating cycle measures the time it takes to:
A)purchase raw materials and assemble a product
B)assemble a product and book the sale
C)assemble a product, book the sale, and collect on the sale
D)purchase raw materials, assemble a product, book the sale, and collect on the sale

Accepted Answer

The operating cycle of a venture encompasses the entire process from purchasing raw materials, assembling the product, booking the sale, to finally collecting on the sale. This cycle measures the time taken from the initial investment in inventory to the collection of revenue from sales, providing insight into the efficiency and liquidity of the business operations.

Question 5

Calculate the sale-to-cash conversion period based on the following information: average inventories = $120,000; average receivables = $90,000; average payables = $40,000; cost of goods sold = $182,500; and net sales = $365,000.
A)180 days
B)90 days
C)60 days
D)45 days

Accepted Answer

The sale-to-cash conversion period is calculated by adding the inventory conversion period and the receivables conversion period. The inventory conversion period is the average inventories divided by the cost of goods sold per day. The receivables conversion period is the average receivables divided by the net sales per day. Inventory conversion period = (Average Inventories / Cost of Goods Sold) * 365 = ($120,000 / $182,500) * 365 = 240.55 daysReceivables conversion period = (Average Receivables / Net Sales) * 365 = ($90,000 / $365,000) * 365 = 89.86 daysThe sale-to-cash conversion period = Inventory conversion period + Receivables conversion period = 240.55 + 89.86 = 330.41 daysHowever, there seems to be a mistake in my calculation as none of the options match the calculated value. The correct approach should involve calculating the inventory turnover days and receivables turnover days correctly:1. Inventory turnover days = (Average Inventory / Cost of Goods Sold) * 3652. Receivables turnover days = (Average Receivables / Net Sales) * 365Let's correct the calculation:1. Inventory turnover days = ($120,000 / $182,500) * 365 = 240.55 days (This seems to be an error in interpretation; it should be the inventory turnover rate, not days directly.)2. Receivables turnover days = ($90,000 / $365,000) * 365 = 89.86 daysThe correct approach to find the sale-to-cash conversion period should actually involve calculating the days inventory outstanding (DIO), days sales outstanding (DSO), and not directly adding inventory conversion period to receivables conversion period without considering the correct formulas and possibly the payables deferral period (DPO) if needed for a complete cash conversion cycle calculation. Given the mistake in the initial explanation and calculation, let's simplify and correct the approach based on the given options and the typical way to calculate these periods:- Days Inventory Outstanding (DIO) = (Average Inventory / Cost of Goods Sold) * 365- Days Sales Outstanding (DSO) = (Average Receivables / Net Sales) * 365Without the exact formulas and correct calculations provided in the explanation, the correct answer based on the typical calculation method cannot be directly derived from the provided information and the initial incorrect calculation. The explanation attempted to calculate components of the cash conversion cycle but did not accurately follow through with the correct formulas or the typical steps needed to arrive at a sale-to-cash conversion period, leading to confusion. The correct calculation should involve accurately determining the inventory turnover days and receivables turnover days, possibly considering the payables deferral period for a full cash conversion cycle analysis, which was not correctly addressed.

Question 6

Based on the following information, determine the venture's inventory-to-sale conversion period: cash conversion cycle = 250 days; sale-to-cash conversion period = 60 days; and purchase-to-payment conversion period = 70 days.
A)70 days
B)140 days
C)240 days
D)260 days

Accepted Answer

The answer of Based on the following information, determine the...

Quiz 6: Managing Cash Flow

Based on the following information, determine the venture's cash conversion cycle: inventory-to-sale conversion period = 112.9 days; sale-to-cash conversion period = 57.1 days; and purchase-to-payment conversion period = 76.8 days.

A major difference exists between a venture's operating cycle and its cash conversion cycle because the conversion cycle includes the time to:

Based on the following information, determine the average receivables (rounded to thousands of dollars) that were outstanding: net sales = $575,000; sale-to-cash conversion period = 57.1 days; purchase-to-payment conversion period = 76.8 days; and cost of goods sold = $380,000.

A venture's operating cycle measures the time it takes to:

Calculate the sale-to-cash conversion period based on the following information: average inventories = $120,000; average receivables = $90,000; average payables = $40,000; cost of goods sold = $182,500; and net sales = $365,000.

Based on the following information, determine the venture's inventory-to-sale conversion period: cash conversion cycle = 250 days; sale-to-cash conversion period = 60 days; and purchase-to-payment conversion period = 70 days.