Frosty Corporation has the following data, in thousands. Assuming a 365-day year, what is the firm's cash conversion cycle?
$\begin{array}{lr}
\text { Annual sales }= & \$ 45,000 \
\text { Annual cost of goods sold }= & \$ 31,500 \
\text { Inventory }= & \$ 4,000 \
\text { Accounts receivable }= & \$ 2,000 \
\text { Accounts payable }= & \$ 2,400
\end{array}$

Question

Frosty Corporation has the following data, in thousands. Assuming a 365-day year, what is the firm's cash conversion cycle?
 $\begin{array}{lr}
\text { Annual sales }= & \$ 45,000 \
\text { Annual cost of goods sold }= & \$ 31,500 \
\text { Inventory }= & \$ 4,000 \
\text { Accounts receivable }= & \$ 2,000 \
\text { Accounts payable }= & \$ 2,400
\end{array}$

Quizplus · Accepted Answer

$\begin{array}{lr}
\text { Annual sales } & \$ 45,000 \
\text { Annual cost of goods sold (COGS) } & \$ 31,500 \
\text { Inventory } & \$ 4,000 \
\text { Accounts receivable } & \$ 2,000 \
\text { Accounts payable } & \$ 2,400 \
\text { Days in year } & 365 \
\text { Sales per day }= & \$ 123.29 \
\text { COGS per day }= & \$ 86.30 \
\text { Inv. conv. period = Inv./COGS per day }= & 46.35 \
\text { Avg. coll period = Receivables/Sales per day }= & 16.22 \
\text { Pay. def. period = Accounts payable/COGS per day = } & 27.81
\end{array}$ 
CCC = Inv. conv. period + Avg. coll. period σ Pay. def. period = 34.76 days

Frosty Corporation Has the Following Data, in Thousands A) 25 Days B) 28 Days C) 31 Days D)

Frosty Corporation Has the Following Data, in Thousands A) 25 Days
B) 28 Days
C) 31 Days
D)