Problemthe chickman corporation has an inventory conversion, Ask an Expert

Accounting

Problem:

The Chickman Corporation has an inventory conversion period of 60 days, a receivables collection period of 30 days, and a payables deferral period of 30 days. Its annual credit sales are $6,000,000, and its annual cost of goods sold (COGS) is 60% of sales.

Requirement:

Question 1: What is the length of the firm's cash conversion cycle?

Question 2: What is the firm's investment in accounts receivable?

Question 3: What is the company's inventory turnover ratio?

Question 4: Identify three ways in which the company could reduce its cash conversion cycle? What are the possible risks of reducing it?

Note: Provide support for rationale.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91169193

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