Consider the following financial statement information for the Ayala Corporation: Item Beginning Ending Inventory $ 10,500 $ 11,500 Accounts receivable 5,500 5,800 Accounts payable 7,700 8,100 Credit sales $ 85,000 Cost of goods sold 65,000 Calculate the operating and cash cycles.

Cash conversion cycle = 41.67

Operating Cycle = 86.03

Explanations:

Average Invetory = (10500 + 11500)/2= 11,000.00

Average accounts receivable(AR) = (5500 + 5800)/2 = 5,650.00

Average Accounts payable (AP)= (7700 + 8100)/2 = 7,900.00

Credit Sales =85,000.00

AR Turnover = 85000/5650= 15.04

Days sales outstanding = 365/ 15.04 = 24.26

Cost of goods sold = 65,000.00

AP turnover = 65000/7900 = 8.23

Days payable outstanding = 365/8.23 = 44.36

Inventory turnover= 65000/11000 = 5.91

Days inventory O/S = 365/5.91 = 61.77

Cash conversion cycle = Days Inventory outstanding + days Sales o/S - Days Payable O/S = 61.77 + 24.26 - 44.36 = 41.67

Operating Cycle = Days' Sales of Inventory + Days Sales Outstanding 61.77 + 24.26 = 86.03

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1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know