Question
Problem 7: The working capital cycle represents that period from when inventory is paid for until cash is received on inventory sales. The following discloses
Problem 7: The working capital cycle represents that period from when inventory is paid for until cash is received on inventory sales. The following discloses the key turnover ratios related to working capital accounts for Duval Ltd: 2008 2009 2010 Industry Inventory turnover 6.2 times 5.7 times 5.5 times 6.4 times Debtors turnover 7.7 times 7.2 times 6.8 times 8.0 times Creditors turnover 8.4 times 8.7 times 9.2 times 7.5 times (a) Convert the turnover times to days. (b) Calculate the working capital cycle for each year (days). [Note: Working capital cycle = debtors turnover period + inventory turnover period creditors turnover period] (c) How significant to management are your findings?
Problem 7: The working capital cycle represents that period from when inventory is paid for until cash is received on inventory sales. The following discloses the key turnover ratios related to working capital accounts for Duval Ltd: Inventory turnover Debtors turnover Creditors turnover 2008 6.2 times 7.7 times 8.4 times 2009 5.7 times 7.2 times 8.7 times 2010 5.5 times 6.8 times 9.2 times Industry 6.4 times 8.0 times 7.5 times (a) Convert the turnover times to days. (b) Calculate the working capital cycle for each year (days). [Note: Working capital cycle = debtors turnover period + inventory turnover period - creditors turnover period] (c) How significant to management are your findingsStep by Step Solution
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