[HW 4.2b] Cash Conversion Cycle

Based on the data that you pulled to complete your DuPont Analysis, please prepare assess the Cash Conversion Cycles for the same companies.

To do this, you will need to calculate the ratios for:

* Days Sales Outstanding
* Days Sales in Inventory
* Days Payables Outstanding

and then put these three numbers together to calculate the number of days that it takes each company to go from cash back to cash.

Turn in something that looks nice.





  1. barroyo2015 · · Reply

    Is it better to use data from the annual financial statements, or quarterly? (for COGS, Inventory, A/R and A/P, specfically) ?


  2. Either way. I’d probably do it with quarterly data. It might be easier to pull the data if you need to from Yahoo Finance. Here are, for example, quarterly numbers for Chipotle.


  3. Do you want us to show these results in a graph? Or is it acceptable to simply use numbers to show how we came out with the final cash conversion cycle?


  4. Present the information however you feel is the best way to communicate it.


  5. Sarah Breckinridge · · Reply

    so we should show the cycle for each of the four quarters?


    1. Use your best judgment as to how and what to show.


  6. Does it make any sense to end up with a negative value for Days of Working Capital Financing Needed? I am working on four airline companies and they all have a very high ratio for Days Accounts Payable Outstanding, compared to the other two ratios.


  7. Recall from the slides today that Dell has negative working capital. I could see how airlines might also. I’ve flown a lot of flights, but I’ve always had to pay for the flight in advance. Sometimes 30 days in advance, often more. N told be yesterday that he buys his flights to Nigeria a year in advance. And I’ve never heard of an airline sending an invoice for a flight already taken.


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