Consider the following financial statement information for Kirkwood United. Assume all sales are on credit.How long is the cash cycle?

Question

Consider the following financial statement information for Kirkwood United.  Assume all sales are on credit.How long is the cash cycle?

Quizplus · Accepted Answer

Inventory period = 365/{$82,500/[($10,407 + $10,822)/2]} = 46.96 days; Accounts receivable period = 365/{$146,400/[($6,840 + $7,301)/2]} = 17.63 days; Accounts payable period = 365/{$82,500/[($7,221 + $6,948)/2]} = 31.34 days; Cash cycle = 46.96 + 17.63 - 31.34 = 33.25 days

Consider the Following Financial Statement Information for Kirkwood United