Your boss asks you to compute the company's cash conversion cycle. Looking at the financial statements, you see that the average inventory for the year was $126,300, accounts receivable were $97,900, and accounts payable were at $115,100. You also see that the company had credit sales of $324,000 and that cost of goods sold was $282,000. What is your firm's cash conversion cycle

124.78 days

Explanation:

The computation of the cash cycle is shown below:

The cash cycle = Days inventory outstanding + days sale outstanding - days payable outstanding  

where,

Day inventory outstanding = (Average inventory) ÷ cost of goods sold × number of days in a year

= ($126,300) ÷ $282,000 × 365 days

= 163.47 days

Day sale outstanding = (Average Accounts receivable) ÷ Net credit sales × number of days in a year

= ($97,900 ÷ $324,000) × 365 days

= 110.28 days

Day payable outstanding = (Average Accounts payable) ÷ cost of goods sold × number of days in a year

= ($115,100 ÷ $282,000) × 365 days

= 148.97 days

Now put these days to the above formula  

So, the days would equal to

= 163.47 days + 110.28 days - 148.97 days

= 124.78 days

since the options are not listed, when you are working on your budget you should also add water, tv, internet, miscellaneous and your 'fun' money for in your budget. when budgeting, you need to allow for fun money, and mis/accidental money so that you stick to the budget and not go crazy because you feel strapped to the budget.