Bavarian Brew has an average age of inventory of 35 days, an average collection period of 27 days, and
an average payment period of 16 days. What is the company’s cash conversion cycle?
a.
62 days
b.
46 days
c.
51 days
d.
43 days
ANS: B
35+27-16 = 46
Bavarian Brew has an average age of inventory of 35 days, an average collection period of 27 days. What
is the company’s operating cycle?
a.
35 days
b.
27 days
c.
62 days
d.
8 days
ANS: C
35+27 = 62
Miller’s Toys has an average inventory of 2,000 toy trucks. The carrying cost per unit per year is 10¢.
Miller places an order for 3,500 toy trucks on the first of each month and the order cost is $20. What is
the economic order quantity?
a.
894.43
b.
645.28
c.
357.21
d.
4,099
ANS: D
Annual Inventory Needs = 3,5
The Polyana Shoe Store had sales last year of $50,000,000 based upon a cost of goods sold of
$40,000,000. Polyana also has inventory, accounts receivable, and accounts payable of $5,000,000,
$7,000,000, and $9,000,000, respectively. What is Polyana’s average age of inventory?
a.
.125 days
b.
8.000 days
c.
36.500 days
d.
45.625 days
ANS: D
5,000,000 / (40,000,000/365) = 45.625 days
The Polyana Shoe Store had sales last year of $50,000,000 based upon a cost of goods sold of
$40,000,000. Polyana also has inventory, accounts receivable, and accounts payable of $5,000,000,
$7,000,000, and $9,000,000, respectively. What is Polyana’s average collection period?
a.
.140 days
b.
7.140 days
c.
d.
51.100 days
63.875 days
ANS: C
7,000,000 / (50,000,000/365) = 51.1 days
The Polyana Shoe Store had sales last year of $50,000,000 based upon a cost of goods sold of
$40,000,000. Polyana also has inventory, accounts receivable, and accounts payable of $5,000,000,
$7,000,000, and $9,000,000, respectively. What is Polyana’s average payment period?
a.
.1 days
b.
10.0 days
c.
29.2 days
d.
82.1 days
ANS: D
9,000,000 / (40,000,000/365) = 82.1 days
The Polyana Shoe Store had sales last year of $50,000,000 based upon a cost of goods sold of
$40,000,000. Polyana also has inventory, accounts receivable, and accounts payable of $5,000,000,
$7,000,000, and $9,000,000, respectively. What is Polyana’s cash conversion cycle period?
a.
.365 days
b.
2.740 days
c.
14.600 days
d.
133.225 days
ANS: C
CCC = AAI + ACP - APP
= (5,000,000/ (40,000,000/365)) + (7,000,000/(50,000,000/365)) - (9,000,000/(40,000,000/365))
= 45.625 + 51.1 - 82.125 = 14.60