Question 4 (Marks: 10)

The following information is an extract of the statement of profit or loss of Palladium Ltd for the

current financial year:

Annual sales (20% cash) R625 000

Cost of Sales R125 000

Purchases (50% on credit) R200 000

The average accounts receivable collection period is 45 days. The average payment supplier period

is 50 days and the cash conversion cycle has been calculated as 55 days.

REQUIRED:

Q.4.1 Calculate the total average investment in the cash conversion cycle (CCC) for

Palladium Ltd.

Assume that there are 365 days in a year.

Round to the nearest Rand.

(10)