Finance Discussion Question

   Must post first.   

The  cash conversion cycle is defined as the average length of time a dollar  is tied up in current assets.  The text identifies three principal  components that jointly comprise the cash conversion cycle.

• Inventory period


• Accounts Receivables period


• Accounts Payables period

 Ideally, a company wants to minimize the cash conversion cycle as  much as possible. In some circumstances, a firm has a comparative  advantage in working capital management because of the nature of its  business. 

In your initial response to the topic, complete the following:

1. Go to http://finance.yahoo.com  and get a quote for one company of your choice. On the left column,  scroll down and select “Income Statement.” Write down the annual sales,  cost of goods sold, and depreciation expense for the most recent year.  For some companies, depreciation expense can be found in Cash Flow  statement.

2. Select the firm's Balance Sheet. Write down the balances shown for  the firm's inventories, accounts receivable, and accounts payable.

3. Using the information from parts a and b, calculate the following.  You should show your work!

• Inventory turnover and Days Sales in Inventory (DSI)


• Accounts receivable turnover and Days Sales Outstanding (DSO)


• Accounts payable turnover and Days Payables Outstanding. (DPO)

4. What is the company’s cash conversion cycle?  

CCC = DSI + DSO – DPO

5. Discuss your results.  Does the company have to worry about this length of time?

When you reply to TWO other classmates, be sure to address whether or not you agree with their analysis, and why.  You should have at least THREE posts for the week - one main thread and two replies.

Note - be sure to properly cite your resources using the APA style.