Queen Co.\'s balance in accounts receivable is $240,000. Annual credit sales are
ID: 2683340 • Letter: Q
Question
Queen Co.'s balance in accounts receivable is $240,000. Annual credit sales are $2,880,000. Queen's average collection period is:Answer
30.4 days.
12 days.
2.5 days.
There is not enough information.
Frosty's Frozen Food Inc.'s inventory balance is $1.22 million. Frosty's Cost of Good's Sold is $30.4 million. It's inventory conversion period:
Answer
14.65 days.
299.2 days.
12 days.
24.92 days.
Abbot Corporation has an average collection period of 49 days, an inventory conversion period of 83 days, and a payables deferrable period of 36 days. What is Abbott's cash conversion cycle?
Answer
96 days
70 days
132 days
85 days
Explanation / Answer
1.receivables turnover=Net credit sales/Average accounts receivables =2,880,000/240,000=12 days average collection period =365/receivables turnover =365/12=30.4 days 2.inventory collection period =(inventory balance*365)/cost of goods sold =1.22*365/30.4=14.65days 3.cash conversion cycle=inventory conversion period + receivables conversion period – payables deferral period CCC = 83+49-36 =96 days