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Solution to Problem 1
Inventory Conversion Period, ICP = Inventory/ (Cost of Goods Sold/360)
= 270,000,000/ (1,230,000,000/360) days
= 79.02 days or 79 days
Days Sales Outstanding, DSO = Accounts Receivables/ (Sales/360)
= 180,000,000/ (1,500,000,000/360) days
= 43.2 days or 43 days
Payable Deferral Period, DPO = Accounts Payables/ (Cost of Goods Sold/360)
= 30,000,000/ (1,230,000,000/360) days
= 8.78 days or 9 days
Cash Conversion Cycle, CCC = Inventory Conversion Period, ICP + Days Sales Outstanding,
DSO - Payable Deferral Period, DPO
= 79 + 43 – 9 days
= 113 days
The annual average cost of Labor and Materials = 80% of Cost of Goods Sold
= 80% of 1,230,000,000
= TK. 984,000,000
Therefore, the daily average cost of Labor and Materials = TK.984,000,000/360
