Becker.com has an inventory turnover ratio of 52, an accounts receivable balance of $365,000, average daily credit sales of $36,500, accounts payable of $182,500 and cost of goods sold of $7,993,500. What is Becker's cash conversion cycle to the nearest day?
A) 17 days
B) 9 days
C) 27 days
D) -27 days

Question

Quizplus · Accepted Answer

The cash conversion cycle (CCC) is calculated as Days Inventory Outstanding (DIO) + Days Sales Outstanding (DSO) - Days Payable Outstanding (DPO). DIO = 365 / Inventory Turnover Ratio = 365 / 52 = 7 days. DSO = Accounts Receivable / Average Daily Credit Sales = $365,000 / $36,500 = 10 days. DPO = Accounts Payable / (Cost of Goods Sold / 365) = $182,500 / ($7,993,500 / 365) = 8 days. CCC = 7 + 10 - 8 = 9 days.

BeckerCom Has an Inventory Turnover Ratio of 52, an Accounts