Calculate operating and cash cycles

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Reference no: EM131357949

Consider the following financial statement information for the Windbag Balloon Corporation:

Item Beginning of 2013 Ending of 2013

Inventory $4,925 $5,150

Accounts receivable $3,019 $3,380

Accounts payable $7,516 $7,952

Net sales $47,115

Cost of goods sold $22,893

(1) Calculate the operating and cash cycles. How do you interpret your answer?

(Use the average Inventory, A/R and A/P for 2013 to calculate the cycles)

(2) In general, will shortening cash cycle increase a firm’s profitability? Why?

Reference no: EM131357949

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