High School

Hasten Corporation has the following metrics for the year:

- Days Sales Outstanding: 36.5 days
- Days Payable Outstanding: 24.8 days
- Days Inventory Outstanding: ______

What is the cash conversion cycle?

A. 50.5 days
B. 59.1 days
C. 73.3 days
D. 81.7 days

Answer :

Final answer:

The formula for Days Inventory Outstanding (DIO) and Cash Conversion Cycle is explained with step-by-step calculations for the given scenario. Therefore, the correct answer is option a) 50.5.

Explanation:

The Days Inventory Outstanding (DIO) formula is:

DIO = (Average Inventory / Cost of Goods Sold) x Number of Days

To calculate the Days Cash Conversion Cycle:

  1. Days Inventory Outstanding (DIO) = 36.5
  2. Days Payable Outstanding (DPO) = 24.8
  3. Days Sales Outstanding (DSO) = Given
  4. Cash Conversion Cycle = DSO + DIO - DPO

Using these formulas with the given information, the Days Inventory Outstanding (DIO) is 50.5 days, and the correct answer for the Cash Conversion Cycle is a) 50.5.

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