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Sagot :
1) Based on the data given, Kretovich Company's estimated revenue or sales at year-end is $2,780,000.
2) The speed at which Kretovich Company accrues cash flows if it pays its suppliers every 30 days is 61.5 days, which is given by the cash conversion cycle.
What is the cash conversion cycle?
The cash conversion cycle represents the days that it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
The cash conversion cycle can be computed with the following formula:
Cash Conversion Cycle = DIO + DSO – DPO
Where:
DIO = Days Inventory Outstanding
DSO = Days Sales Outstanding
DPO = Days Payable Outstanding
Data and Calculations:
Quick ratio = 1.4
Current ratio = 3.0
DSO = 36.5 days on a 365-day year.
Current assets = $800,000
Cash and marketable securities = $100,000
Using the current ratio of 3.0, the current liabilties = $270,000 ($800,000/3.0)
Current assets other than inventory = $378,000 ($370,000 x 1.4)
Inventory = $422,000 ($800,000 - $378,000)
Accounts receivable = $278,000 ($800,000 - $422,000 - $100,000)
Sales revenue = $2,780,000 ($278,000 x 365/36.5)
DIO = average (or ending) inventory balance by COGS and multiplying by 365 days.
Here, we shall use the sales figure in place of the cost of goods sold as follows:
DIO = $422,000/$2,780,000 x 365
= 55 days
Cash conversion cycle (or DIO + DSO – DPO).
= 61.5 days (55 + 36.5 - 30)
Learn more about the cash conversion cycle at https://brainly.com/question/17439117
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