Question
Ahmed textile reported sales of Rs.32 million and its cost of goods sold is Rs. 12.8 million in 2020. The balance sheet of the company
Ahmed textile reported sales of Rs.32 million and its cost of goods sold is Rs. 12.8 million in 2020. The balance sheet of the company is furnished below:
Ahmed Textile
Balance Sheet
As of December 31,2020
In Rs. Thousands
Assets | Liabilities and Equity | ||
Cash | Rs. 1,954 | Accounts payable | Rs. 1,300 |
Account receivable | 4,414 | Notes payable | 1,000 |
Inventory | 1,414 | Accruals | 1,220 |
Total current assets | 7,782 | Total current liabilities | 3,520 |
|
| Long term liabilities | 3,000 |
|
| Total liabilities | 6,520 |
Fixed assets | 8,500 | Common equity | 9,762 |
Total assets | 16,282 | Total | 16,282 |
*company is operating for 365 days a year.
- What is the net working capital of Ahmed Textile in 2020? (2 marks)
- What is Ahmed Textiles Cash Conversion Cycle in 2020? (4 marks)
- What is Ahmed Textiles Operating Cycle in 2020? (2 marks)
- Assume that the average accounts receivable days for the textile industry is 30 days. What should be the cash conversion cycle of Ahmed Textile if it wants to match its accounts receivable days to industry average of 30 days? (2 marks)
PLEASE SOLVE THIS URGENTLY ALL PARTS THANKS .
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