Question

In: Finance

Account Beginning Balance Ending Balance Inventory $2,600 $2,890 Accounts receivable $3,222 $2,800 Accounts payable $2,500 $2,670...

Account	Beginning Balance	Ending Balance
Inventory	$2,600	$2,890
Accounts receivable	$3,222	$2,800
Accounts payable	$2,500	$2,670

Net sales	$24,589
Cost of goods sold	$19,630

What is the operating cycle?

	a.	51.04 days
	b.	95.74 days
	c.	48.07 days
	d.	99.11 days

Following Question 1, what is the cash cycle?

	a.	44.70 days
	b.	48.07 days
	c.	47.67 days
	d.	51.04 days

Solutions

Expert Solution

Average inventory = ( beginning inventory + ending inventory)/2

Average inventory = (2600+2890)/2

Average inventory = 2745

Average Receivables= ( beginning Receivables+ ending Receivables)/2

Average Receivables = (3222+2800)/2

Average Receivables = 3011

Average Payables= ( beginning Payables+ ending Payables)/2

Average Payables = (2500+2670)/2

Average Payables = 2585

Inventory turnover = COGS/inventory

Inventory turnover = 19630/2745

Inventory turnover = 7.15

days of inventory on hand = number of days in a year/inventory turnover

days of inventory on hand = 365/7.15

days of inventory on hand = 51.05

Receivables turnover = Credit sales/receivables

Receivables turnover = 24589/3011

Receivables turnover = 8.17

days of sales outstanding = number of days in a year/receivables turnover

days of sales outstanding = 365/8.17

days of sales outstanding = 44.68

Accounts payables turnover = COGS/payables

Accounts payables turnover = 19630/2585

Accounts payables turnover = 7.48

days of payables outstanding = number of days in a year/accounts payable turnover

days of payables outstanding = 365/7.48

days of payables outstanding = 48.8

Operating cycle = days of sales outstanding + days of inventory on hand

Operating cycle = 44.68+51.05

Operating cycle = 95.73

Cash conversion cycle = Operating cycle - days of payables outstanding

Cash cycle = 95.73-48.09

Cash cycle = 47.64

jeff jeffy answered 11 months ago

Next > < Previous

Related Solutions

inventory: beginning $21,430 Ending $23,865 Accounts receivable: beginning $15,362 Ending $17,210 accounts payable: beginning $20,416 Ending...

inventory: beginning $21,430 Ending $23,865 Accounts receivable: beginning $15,362 Ending $17,210 accounts payable: beginning $20,416 Ending $21,803 net sales for the year: $243,612 cost of goods sold for the year: $108,915 what is the cash cycle?

Shown below in T-account format are the beginning and ending balances ($ in millions) of both inventory and accounts payable.

Shown below in T-account format are the beginning and ending balances ($ in millions) of both inventory and accounts payable. Required: 1. Use a T-account analysis to determine the amount of cash paid to suppliers of merchandise during the reporting period if cost of goods sold was $300 million. 2. Prepare a summary entry that represents the net effect of merchandise purchases during the reporting period.

A company has inventory balance of $24,318, accounts receivable of $9,637, and accounts payable of $14,365....

A company has inventory balance of $24,318, accounts receivable of $9,637, and accounts payable of $14,365. If the credit sales are $183,030 and cost of goods sold are $128,952, what is the company's cash (conversion) cycle in number of days? (Use ending balances and assume 365 days in a year.) A) 36.59 B) 37.61 C) 38.63 D) 39.64 E) 40.66

A company has inventory balance of $24,935, accounts receivable of $9,902, and accounts payable of $14,652....

A company has inventory balance of $24,935, accounts receivable of $9,902, and accounts payable of $14,652. If the credit sales are $186,978 and cost of goods sold are $132,477, what is the company's cash (conversion) cycle in number of days? (Use ending balances and assume 365 days in a year.)

What is the value of Accounts Receivable, Gross at the beginning and the ending of the...

What is the value of Accounts Receivable, Gross at the beginning and the ending of the current fiscal year? Any examples?

If ending accounts receivable exceeds the beginning accounts receivable: A. cash collections during-the period exceed the...

If ending accounts receivable exceeds the beginning accounts receivable: A. cash collections during-the period exceed the amount of revenue earned. B. net Income for the period is less than the amount of cash basis income. C. no cash was collected during the period. D. cash collections during the year are less than the amount of revenue earned.

Date please white general ledger : cash at bank, accounts receivable, inventory,account payable, bank loan payable,...

Date please white general ledger : cash at bank, accounts receivable, inventory,account payable, bank loan payable, Transaction description 1 Obtained a loan of $48,000 from MRMC Bank at a simple interest rate of 6% per year. The first interest payment is due at the end of August 2018 and the principal of the loan is to be repaid on 1 June 2021. 2 Sold 9 boxes of Sprearmint Gum to Sweet Tooth for $100 each, Invoice No. 201. 3 Purchased...

Accounts payable 2,300 Accounts Receivable 1,500 Accumulated depreciation - Equipment 4,000 Cash 2,600 Common Stock 4,800...

Accounts payable 2,300 Accounts Receivable 1,500 Accumulated depreciation - Equipment 4,000 Cash 2,600 Common Stock 4,800 Equipment 7,500 Inventory 400 Land 10,000 Land held as long term investment 8,000 Notes payable (due in 5 Years) 6,000 Patent 2,500 Retained Earnings 1/1 16,000 Short- term investments 1,000 Wages Payable 400 Required: Calculate following amounts. Show all work. Total Current Assets (in order of liquidity) Total property, plant, and equipment Total Assets Total Current liabilities Total Liabilities Total Stockholders equity Prove that...

Consider the following financial statement information: Account Beginning Balance Ending Balance Inventory $ 18,600 $ 19,400...

Consider the following financial statement information: Account Beginning Balance Ending Balance Inventory $ 18,600 $ 19,400 Accounts receivable 4,200 4,500 Accounts payable 5,800 5,200 Net sales 76,400 Cost of goods sold 51,700 Assume all sales and purchases are on credit.: How long is the cash cycle? (Use average balance sheet account balances.) Multiple Choice 80.21 days 116.09 days 101.03 days 113.58 days 73.57 days

The following information relates to a company’s accounts receivable: accounts receivable balance at the beginning of...

The following information relates to a company’s accounts receivable: accounts receivable balance at the beginning of the year, $410,000; allowance for uncollectible accounts at the beginning of the year, $30,000 (credit balance); credit sales during the year, $1,500,000; accounts receivable written off during the year, $21,000; cash collections from customers, $1,400,000. Assuming the company estimates that future bad debts will equal 8% of the year-end balance in accounts receivable. 1. Calculate the year-end balance in the allowance for uncollectible accounts....

Subjects