Firm cash conversion cycle

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The Hamlin Corporation has an inventory conversion period of 60 days, a receivables collection period of 30 days, and a payables deferral period of 28 days. Its annual credit sales are $5,000,000, and its annual credit purchases are $3,500,000.

a. What is the length of the firm's cash conversion cycle?

b. What is the firm's investment in accounts receivable?

c. What is the firm's level of accounts payable?

d. Calculate how many times a year the company's inventory is turned over.

e. Identify three ways in which the company could reduce its cash conversion cycle? What are possible risks in reducing it?

Please answer showing the steps.

Reference no: EM13150164

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