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Determining the inventory conversion period at various parameters.

The Garcia Industries balance sheet and income statement for the year ended 2006 are as follows:

Balance sheet (in millions of dollars)

Assets Liabilities and Stockholders' Equity

Cash $ 6.0 Accounts Payable $10.0

Acc Receive 14.0 Salaries, benefits and payroll 2.0

Inventories 12.0 Other current liabilities 10.0

Fixed assets 40.0 Long term debt 12.0

$72.0 Stockholders' equity 38.0

$72.0

*The average inventory over the past 2 years also equals $12.0 million

Income Statement (in millions of dollars)

Net sales $100.0

Cost of sales 60.0

Selling, gen/admin expenses 20.0

Other expenses 15.0

Net income $ 5.0

A. determine the length of the inventory conversion period

B. determine the length of the receivables conversion period

C. determine the length of operating cycle

D. determine the length of the payables deferral period

E. determine the length of the cash conversion cycle

F. what is the meaning of the number calculated in (e)?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9726429

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