Answer Happy

Exercise 3. Calculate the inventory turnover, the days sales in inventory, the accounts receivable turnover and the account payables ratios for company A and B considering the following financial information. What is the operation cycle and cash conversion cycle for both retail companies A and B ? Has the companies better managed its inventory? Which improvements would you suggest for each companies ? Retail company A Sales Allowances Returns Cost of Goods sold Account receivables Accounts payables 2020 2021 8,250,000 7,500,000 350,000 300,000 150,000 250,000 3,700,000 320,000 500,000 700,000 1,200,000 1,500,000 Retail company B Sales Allowances Returns Cost of Goods sold Account receivables Accounts payables 2020 2021 7,900,000 8,300,000 150,000 200,000 50,000 50,000 2,100,000 2,500,000 1,300,000 1,600,000 300,000 500,000