Cromwell Incorporated has the information shown above on its annual Income Statement and Balance Sheet (all numbers shown are in thousands). What is Cromwell's cash conversion cycle?
A) -41.8 days
B) -36.1 days
C) 24.3 days
D) 111.6 days

Question

Cromwell Incorporated has the information shown above on its annual Income Statement and Balance Sheet (all numbers shown are in thousands). What is Cromwell's cash conversion cycle?
A) -41.8 days 
B) -36.1 days 
C) 24.3 days 
D) 111.6 days

Quizplus · Accepted Answer

A) Cash conversion cycle = inventory days + accounts receivable - accounts payable
Inv Days = $1420 / ($104,380 / 365 days) = 4.9655 days;
Accounts Rec Days = $10,900 / ($122,800 / 365 days) = 32.398 days;
Accounts Payable Days = $22,640 / ($104,380 / 365 days) = 79.1684 days;
Cash conversion cycle = 4.9655 days + 32.398 days - 79.168 days = -41.8 days

Cromwell Incorporated Has the Information Shown Above on Its Annual