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Skymax has an inventory turnover rate of 11.8, an accounts payable period of 32 days, and...

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Finance

Skymax has an inventory turnover rate of 11.8, an accountspayable period of 32 days, and an accounts receivable period of 39days. What is the length of the cash cycle?

45.68 days

41.02 days

37.93 days

34.29 days

30.05 days

Answer & Explanation Solved by verified expert
4.0 Ratings (475 Votes)

Days of inventory on hand= 365/ Inventory turnover

                                          = 365/ 11.8

  = 30.93 days

Cash conversion cycle= Days of inventory outstanding + Days of sales outstanding – Days of payables outstanding

                                    = 30.93 + 39 – 32

                                    = 37.93 days.

Hence, the answer is option c.

In case of any query, kindly comment on the solution.
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Transcribed Image Text

Skymax has an inventory turnover rate of 11.8, an accountspayable period of 32 days, and an accounts receivable period of 39days. What is the length of the cash cycle?45.68 days41.02 days37.93 days34.29 days30.05 days

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