Dewey Corporation has the following data,in thousands.Assuming a 365-day year,what is the firm's cash conversion cycle? Round your answer to the nearest day.

Question

Dewey Corporation has the following data,in thousands.Assuming a 365-day year,what is the firm's cash conversion cycle? Round your answer to the nearest day.  ​

Quizplus · Accepted Answer

Cash conversion cycle = DIO + DSO - DPO 
DIO (Days Inventory Outstanding) = (Average inventory/Cost of goods sold) x 365 = (700/2,100) x 365 = 122 
DSO (Days Sales Outstanding) = (Average accounts receivable/Sales per day) = (400/7) = 57 
DPO (Days Payable Outstanding) = (Average accounts payable/Purchases per day) = (200/5) = 40 
Cash conversion cycle = DIO + DSO - DPO = 122 + 57 - 40 = 139 - 40 = 99 
Therefore, the firm's cash conversion cycle is 30 days (rounded to the nearest day).

Dewey Corporation Has the Following Data,in Thousands