Question: The Garcia Industries balance sheet and income statement for the year ended 2006 are as follows:
Balance Sheet [in Millions of Dollars]
|
Assets
|
Liabilities and Stockholder\\\'s Equity
|
|
Cash
|
$6.0
|
Accounts Payable
|
$10.0
|
|
Accounts receivable
|
14.0
|
Salaries, benefits, and payroll taxes payable
|
2.0
|
|
Inventories*
|
12.0
|
Other current liabilities
|
10.0
|
|
Fixed Assets, net
|
40.0
|
Long-term debt
|
12.0
|
|
|
|
Stockholders\\\' equity
|
38.0
|
|
|
72.00
|
|
72.00
|
The average inventory over the past 2 (2) years also equals 12 million.
Income Statement (in Millions of Dollars)
|
Net Sales
|
$100.0
|
|
Cost of Sales
|
60.0
|
|
Selling, general and administrative expenses
|
20.0
|
|
Other expenses
|
15.0
|
|
Net Income
|
5.0
|
[A] Calculate the length of the inventory conversion period.
[B] Calculate the length of the receivables conversion period.
[C] Calculate the length of the operating cycle.
[D] Calculate the length of the payables deferral period.
[E] Calculate the length of the cash conversion cycle.
[F] What is the meaning of the number you calculated in (e)?