Chastain Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash conversion cycle. Chastain’s 2016 sales (all on credit) were $220,000; its cost of goods sold is 80% of sales; and it earned a net profit of 8%, or $17,600. It turned over its inventory 7 times during the year, and its DSO was 31 days. The firm had fixed assets totaling $41,000. Chastain’s payables deferral period is 35 days. Assume 365 days in year for your calculations.
Calculate Chastain’s cash conversion cycle.