Question
1. Worldwide Rugs is a US-based carpet importer that sells its imported products to local retailers. Last year, Worldwide Rugs imported $ 2.5 million worth
1. Worldwide Rugs is a US-based carpet importer that sells its imported products to local retailers. Last year, Worldwide Rugs imported $ 2.5 million worth of carpets from other parts of the world, and all payments were made before shipment. As soon as the importers received the carpet, they sold it to local retailers for $ 3 million. Worldwide Rugs allows retailers to sell their carpets on credit. By the end of the year, Worldwide Rugs had collected 85% of its accounts receivable.
a. What will be the accounting profit of Worldwide Rugs for the year?
b.Worldwide Rugs was successful in its accounting year?
c.What will be the financial cash flow of Worldwide Rugs in that year? d.Worldwide Rugs was financially successful in that year?
e.If it continues like this Worldwide Rugs What are your expectations for future success?
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