ACC222

REQUIREMENT
CASH CONVERSION CYCLE

Go to www.finance.yahoo.com and then input the ticker symbols noted in parenthesis

following each of the company names listed below. Under the Financials heading in the left-
hand column, click on “Income Statement” and “Balance sheet” to obtain the most recent
income statement and balance sheet for the selected firm. Use the appropriate financial
statement data for each firm to respond to the following instructions and questions. Select
only two firms of the same industry for your analysis.

 Anheuser-Busch Companies, Inc. (BUD) BEER COMPANY

 Coca-cola Company (KO) SOFTDRINK COMPANY
 Molson Coors Brewing Company (TAP) BEER COMPANY
 PepsiCo, Inc (PEP) SOFTDRINK COMPANY

a. Use the formulas given in the chapter to calculate the following time periods (in
days) for each of the firms.
(1) Average age of inventory
(2) Average collection period
(3) Average payment period
b. Use the time periods calculated in part (a) to calculate each firm’s operating cycle
and cash conversion cycle.
c. Compare the operating cycle and cash conversion cycle calculated in part (b) of the
selected companies. How would you describe the difference found for each pair of
firms?
d. Recommend steps to improve the figures computed above