Question
If days creditors ratio was 25 days, calculate what the cash cycle would be if all sales for the year were on credit and amounted
If days creditors ratio was 25 days, calculate what the cash cycle would be if all sales for the year were on credit and amounted to $104000, gross profit was $60320, the average trade debtors was $12480, while the average inventory was $16640(Use 2 decimal places for all items calculated).
| Days debtors | ||
| Formula | = | AnswerAverage trade debtorsSales revenueAverage inventoryCost of salesGross profitDays creditors x 365 |
| AnswerAverage trade debtorsCost of salesGross profitDays creditorsSales revenueAverage inventory | ||
|
|
| |
|
| = | $Answer x 365 |
| $Answer | ||
|
|
| |
| = | Answerdays | |
| Days inventory | ||
| Formula | = | AnswerAverage trade debtorsCost of salesSales revenueAverage inventoryGross profitDays creditors x 365 |
| AnswerGross profitAverage trade debtorsCost of salesSales revenueDays creditorsAverage inventory | ||
|
|
| |
|
| = | $Answer x 365 |
| $Answer | ||
|
|
| |
| = | Answer days | |
Cash cycle = Answer days
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Financial and Managerial Accounting the basis for business decisions
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
16th edition
0077664078, 978-0077664077, 78111048, 978-0078111044
