Question
NiKi International Pte Ltd reported healthy profits from its business for the past few years. However, the company still experience cash flow issues occasionally. In
NiKi International Pte Ltd reported healthy profits from its business for the past few years. However, the company still experience cash flow issues occasionally. In order to prevent such incidence to happen again, the Finance Manager had compiled the following information for analysis:
20192020
Annual credit sales $800,000 $970,000
Cost of goods sold $360,000 $560,000
Accounts receivable balance $270,000 $410,000
Inventory balance $290,000$330,000
Balance in accounts payable $200,000 $290,000
Assume that there are 365 days in a year.
A) Compute the operating cycle for Year 2020.
B) Determine the cash cycle for Year 2020.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
A The operating cycle can be calculated using the following formula Operating Cycle ...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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