https://file.aiquickdraw.com/mathbot/file/172438772644796cl8kd8.jpg

https://file.aiquickdraw.com/mathbot/file/1724387726448j0oou26w.jpg

Calculate the Average Age of Inventory (AAI), Average Collection Period (ARP), Average Payment Period (APP), Operating Period (OP) and Cash Conversion Cycle (CCC) for 2021. Use operating cost instead of inventory

To calculate the requested financial metrics, we need to extract relevant information from the images. Here’s how each metric is defined and calculated using financial dataTo calculate the requested financial metrics, we need to extract relevant information from the images. Here’s how each metric is defined and calculated using financial 

1. **Average Age of Inventory (AAI)**:
   \[
   \text{AAI} = \frac{\text{Average Inventory}}{\text{COGS}} \times 365
   \]
   Since the instruction is to use operating costs instead of inventory, we can adjust the formula accordingly.

2. **Average Collection Period (ACP)**:
   \[
   \text{ACP} = \frac{\text{Accounts Receivable}}{\text{Net Sales}} \times 365
   \]

3. **Average Payment Period (APP)**:
   \[
   \text{APP} = \frac{\text{Accounts Payable}}{\text{COGS}} \times 365
   \]

4. **Operating Period (OP)**:
   \[
   \text{OP} = \text{AAI} + \text{ACP}
   \]

5. **Cash Conversion Cycle (CCC)**:
   \[
   \text{CCC} = \text{OP} - \text{APP}
   \]

Let's extract the required data from the uploaded images to calculate these metrics.

### Image Analysis:
The two images contain financial statements, likely showing balance sheets, income statements, or other relevant data. Let's identify the relevant figures:

**Key Data Needed:**
- Operating Costs (to substitute for inventory)
- COGS (Cost of Goods Sold)
- Accounts Receivable
- Accounts Payable
- Net Sales

I will now extract the necessary values from the images.From the provided images, I have extracted the relevant financial data for the year 2021:

### Extracted Data:

1. **Net Sales**: \( 31,487 \)
2. **Operating Costs (substituting for inventory)**: \( 19,625 \)
3. **COGS**: \( 12,585 \)
4. **Accounts Receivable**: \( 3,958 \)
5. **Accounts Payable**: \( 3,497 \)

### Calculation of Financial Metrics

1. **Average Age of Inventory (AAI)** using Operating Costs instead of Inventory:
   \[
   \text{AAI} = \frac{\text{Operating Costs}}{\text{COGS}} \times 365 = \frac{19,625}{12,585} \times 365 \approx 569.02 \text{ days}
   \]

2. **Average Collection Period (ACP)**:
   \[
   \text{ACP} = \frac{\text{Accounts Receivable}}{\text{Net Sales}} \times 365 = \frac{3,958}{31,487} \times 365 \approx 45.88 \text{ days}
   \]

3. **Average Payment Period (APP)**:
   \[
   \text{APP} = \frac{\text{Accounts Payable}}{\text{COGS}} \times 365 = \frac{3,497}{12,585} \times 365 \approx 101.52 \text{ days}
   \]

4. **Operating Period (OP)**:
   \[
   \text{OP} = \text{AAI} + \text{ACP} = 569.02 + 45.88 \approx 614.90 \text{ days}
   \]

5. **Cash Conversion Cycle (CCC)**:
   \[
   \text{CCC} = \text{OP} - \text{APP} = 614.90 - 101.52 \approx 513.38 \text{ days}
   \]

### Summary of Calculated Values:

- **Average Age of Inventory (AAI)**: 569.02 days
- **Average Collection Period (ACP)**: 45.88 days
- **Average Payment Period (APP)**: 101.52 days
- **Operating Period (OP)**: 614.90 days
- **Cash Conversion Cycle (CCC)**: 513.38 days

Would you like further details or clarification on any of these calculations?

### Related Questions:

1. What impact does a longer cash conversion cycle have on a company's liquidity?
2. How could the company improve its average collection period?
3. What are the implications of using operating costs instead of inventory in these calculations?
4. How does the cash conversion cycle affect the company's working capital management?
5. What strategies could be implemented to reduce the average payment period?

### Tip:

A shorter cash conversion cycle generally indicates better liquidity and efficient working capital management, as it implies that the company can quickly convert its investments into cash.

Learn how to calculate financial metrics including Average Age of Inventory, Average Collection Period, Average Payment Period, Operating Period, and Cash Conversion Cycle for the year 2021 using relevant financial data. Get step-by-step solutions and understand the impact on liquidity and working capital management.

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