Cost of trade credit-cash conversion cycle

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Reference no: EM1350353

Cost of Trade Credit

Calculate the nominal annual cost of nonfree trade credit under each of the following terms. Assume payment is made either on the due date or on the discount date.

A. 1/15, net 20.
B. 2/10, net 60.
C. 3/10, net 45
D. 2/10, net 45
E. 2/15, net 40

Cash Conversion Cycle
The Zocco Corporation has an inventory conversion period of 75 days, a receivables collection period of 38 days, and a payable deferral period of 30 days.

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

B. If Zocco's annual sales are $3,421,875 and all sales are on credit, what is the firm's investment in accounts receivable?

C. How many times per year does Zocco turn over its inventory?

Reference no: EM1350353

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