Sales (all credit): $6,000,000; Cost of Goods Sold: 80% of Sales; Accounts receivable: $350,000; Inventory: $600,000;...

Sales (all credit): $6,000,000; Cost of Goods Sold: 80% of Sales; Accounts receivable: $350,000; Inventory: $600,000; Accounts payable: $150,000 What is the Working Capital Cycle? Use 1 year = 365 days

		11 days.
		46 days.
		22 days
		56 days.

Expert Solution

Working Capital Cycle = 56 days.

Working Capital Cycle (WCC) = Days receivable outstanding + Days inventory outstanding - Days payable outstanding

Formula
	Sales	60,00,000
80% of sales	COGS	48,00,000
	Accounts receivable (AR)	3,50,000
	Inventory (I)	6,00,000
	Accounts Payable (AP)	1,50,000
(AR/Credit sales)*365	Days receivable (DRO)	21
(I/COGS)*365	Days inventory (DIO)	46
(AP/COGS)*365	Days payable (DPO)	11
(DRO+DIO-DPO)	Working Capital Cycle	56

jeff jeffy answered 2 years ago

April May June July Sales 600,000 900,000 500,000 400,000 Cost of Goods sold 420,000 630,000 350,000...

April May June July Sales 600,000 900,000 500,000 400,000 Cost of Goods sold 420,000 630,000 350,000 280,000 Gross Margin 180,000 270,000 150,000 120,000 Selling and admin expenses selling expense 79,000 120,000 62,000 51,000 administrative 45,000 52,000 41,000 38,000 total selling and administrative expenses 124,000 172,000 103,000 89,000 net operating income 56,000 98,000 47,000 31,000 a. sales are 20% for cash and 80% on account b. sales on account are collected over a three month period with 10% collected in the...

. installment sales for 2018 is $600,000 and cost of goods sold $300,000 while the installment...

. installment sales for 2018 is $600,000 and cost of goods sold $300,000 while the installment sales in 2019 is $1,000,000 and cost of goods sold $800,000, cash collection from 2018 sales was $400,000 in 2018 and $200,000 in 2019, cash collection from 2019 sales was $500,000 in 2019 and $500,000 in 2020, using cost recovery method compute gross profit realized in 2018? a. $100,000. b. $200,000. c. $300,000. d. $150,000.

Sales (all on account) $ 773,000 $ 607,000 Cost of goods sold 462,000 402,000 Average inventory...

Sales (all on account) $ 773,000 $ 607,000 Cost of goods sold 462,000 402,000 Average inventory during the year 130,000 120,000 Average receivables during the year 150,000 100,000 a-1. Compute the gross profit percentage for both years. (Round your percentage answers to the nearest whole number. i.e. 0.1234 as 12%.) a-2. Compute the inventory turnover for both years. (Round your answers to 1 decimal place.) a-3. Compute the accounts receivable turnover for both years. (Round your answers to 1 decimal...

Sales $50,400,000 Cost of goods sold $31,500,000 Variable expenses $6,300,000 Fixed expenses $7,150,000 Inventory $9,150,000 Accounts...

Sales $50,400,000 Cost of goods sold $31,500,000 Variable expenses $6,300,000 Fixed expenses $7,150,000 Inventory $9,150,000 Accounts receivable $5,150,000 Other current assets $4,150,000 Fixed assets $7,150,000 a) What is the Net Profit Margin in PERCENT % (rounded to two decimal places)? b) What is the Asset Turnover rounded to two decimal places? c) What is the Return on Assets in PERCENT % (rounded to two decimal places)? d) What is the Size of the Total Assets used by the firm?

Ferguson Company has the following information for March: Sales $600,000 Variable cost of goods sold 276,000...

Ferguson Company has the following information for March: Sales $600,000 Variable cost of goods sold 276,000 Fixed manufacturing costs 90,000 Variable selling and administrative expenses 54,000 Fixed selling and administrative expenses 36,000 Determine the following for Ferguson Company for the month of March: a. Manufacturing margin $ b. Contribution margin $ c. Income from operations $

Accounts Payable 420 Accounts Receivable 3,200 Capital Stock 240 Cash 100 Cost of Goods Sold 600...

Accounts Payable 420 Accounts Receivable 3,200 Capital Stock 240 Cash 100 Cost of Goods Sold 600 Inventory 380 Long-term Debt 4,640 Net Income 280 Property, Plant, and Equipment (net) 1,400 Retained Earnings (220) Sales 3,000 Note: The retained earnings amount reported is as of the END of the year (after the closing entries have been made). Compute AVERAGE COLLECTION PERIOD (also called NUMBER OF DAYS’ SALES IN ACCOUNTS RECEIVABLE). Note: If you need to compute the average balance for any...

Calculation of Cost of Goods Sold: Periodic Inventory System Prepare the cost of goods sold section...

Calculation of Cost of Goods Sold: Periodic Inventory System Prepare the cost of goods sold section for Adams Gift Shop. The following amounts are known: Beginning merchandise inventory $27,050 Ending merchandise inventory 22,550 Purchases 77,125 Purchases returns and allowances 4,055 Purchases discounts 5,745 Freight-in 230 Adams Gift Shop Cost of Goods Sold Cost of goods sold: $ $ $ $ $ Cost of goods sold $

Company A's for 2018 had $58,266.74M in Sales, $31,172.25M Cost of Goods Sold. The Account Receivable...

Company A's for 2018 had $58,266.74M in Sales, $31,172.25M Cost of Goods Sold. The Account Receivable was $5,799.97M. Finally, the inventory and Accounts Payable were $3,000.19M and $12,398.62M respectively. The company increase sales by 36% however keeping the same inventory. Applying the percentage of Sales Method, what would be the new CCC?

Snow Man Inc. has accounts receivable of $4,500, inventory of $1,800, sales of $135,000, and cost...

Snow Man Inc. has accounts receivable of $4,500, inventory of $1,800, sales of $135,000, and cost of goods sold of $64,000. How many days does it take the firm to sell its inventory and collect the payment on the sale assuming that all sales are on credit? (i.e. Inventory Holding Period + Days' sales in receivables) 10.27 days 18.67 days 14.50 days 22.43 days 12.17 days

For all four inventory costing methods, cost of goods sold is always equal to the sum...

For all four inventory costing methods, cost of goods sold is always equal to the sum of beginning inventory plus net purchases. True False

Question