Question
Port West Trading Limited 2014 2015 2016 Sales 1,400,000 1,500,000 1,720,000 Cost of goods sold 1,316,000 1,450,000 1,680,000 84,000 50,000 40,000 Inventory 140,000 180,000 210,000
Port West Trading Limited | ||||
|
| 2014 | 2015 | 2016 |
| Sales | 1,400,000 | 1,500,000 | 1,720,000 |
| Cost of goods sold | 1,316,000 | 1,450,000 | 1,680,000 |
|
| 84,000 | 50,000 | 40,000 |
|
|
|
|
|
| Inventory | 140,000 | 180,000 | 210,000 |
| Accounts receivable | 100,000 | 140,000 | 200,000 |
| Cash | 10,000 | 0 | 0 |
| Current assets | 250,000 | 320,000 | 410,000 |
|
|
|
|
|
| Accounts payable | 79,850 | 85,000 | 90,000 |
| Short term debt | 0 | 34,850 | 79,850 |
| Provisions- returns/refunds | 1,400 | 1,500 | 1,720 |
| Current liabilities | 81,250 | 121,350 | 171,570 |
Assume you are the auditor of Port West Trading Limited. Management provides you with a series of explanations for the 2016 financial results. Which of the following reasons is valid for poor operating cash flow?
Select one:
a.
A decrease in accounts receivable.
b.
An increase in accounts payable.
c.
A decrease in raw material inventory.
d.
An increase in finished goods inventory.
Clear my choice
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