Cash conversion cycle American Products is concerned about managing cash efficiently. On the? average, inventories have an age of 87 ?days, and accounts receivable are collected in 66 days. Accounts payable are paid approximately 31 days after they arise. The firm has annual sales of about ?$40 million. Cost of goods sold are $18 million, and purchases are $13million.
a. Calculate the? firm's operating cycle.
b. Calculate the? firm's cash conversion cycle.
c. Calculate the amount of resources needed to support the? firm's cash conversion cycle.
d. Discuss how management might be able to reduce the cash conversion cycle.