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.

Question

Quizplus · Accepted Answer

Sale-to-cash conversion period = (Average Inventories + Average Receivables - Average Payables) / Cost of Goods Sold x 365

= ($120,000 + $90,000 - $40,000) / $182,500 x 365

= 170,000 / $182,500 x 365

= 0.9342 x 365

= 340.25

Therefore, the sale-to-cash conversion period is 90.0 days (rounded to one decimal place).

Calculate the Sale-To-Cash Conversion Period Based on the Following Information:average