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Suppose that Ken-Z Art Gallery has annual sales of $880,000, cost of goods sold of $570,000,...

Question:

Suppose that Ken-Z Art Gallery has annual sales of $880,000, cost of goods sold of $570,000, average inventories of $156,000, average accounts receivable of $125,000, and an average accounts payable balance of $84,000. Assuming that all of Ken-Z s sales are on credit, what will be the firm's cash cycle days? (Use 365 days a year.)

Average Accounts Receivable:

Average accounts receivable is mean value of the accounts receivable for a given time period. It is a current asset which is highly liquid in character. It is the amount which the company has not got as a result of credit sales.

Answer and Explanation: 1

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{eq}\begin{align*} {\rm\text{Cash cycle}}\, &= \,{\rm\text{Days inventory outstanding}}\, + \,{\rm\text{Days sales outstanding}}\, - \,{\rm\text{Days...

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Operating Cycle & Cash Cycle: Definition & Calculations

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Chapter 17 / Lesson 2
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The operating cycle and cash conversion cycle are both tools to evaluate the timeline of when a business will become profitable. Explore the calculations of each, and identify their importance to a business.


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