What Is the Length of the Cash Conversion Cycle for a Firm

question 68

Essay

What is the length of the cash conversion cycle for a firm with $55,000 in average inventory, $60,000 in average receivables, $30,000 in average payables, annual sales of $700,000, and a cost of goods sold of 75%?

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Definitions:

Manufacturing Overhead

Indirect costs related to manufacturing that cannot be directly tied to a specific product, such as maintenance and factory utilities.

Cost Formula

An equation used to calculate the total cost of production or service delivery, combining fixed costs, variable costs per unit, and expected activity levels.

Spending Variance

The difference between the actual cost incurred and the budgeted or expected cost, often analyzed for cost control purposes.

Cleaning Equipment

Equipment specifically designed for cleaning operations, encompassing a range of items from brooms and mops to sophisticated washing machines.