Question 6

Chapter 18 ort-Term Finence end Piannine Calculating Cycles LOI for the Ayala Corporation: Consider thefollowing financial tauement information Item Inventory Accounts payable Beginning $10,583 5.130 7,205 Ending $13,685 5,690 8,105 Credit sales $127,382 76,157 Cost of goods sold Calculate the operating and cash cycles. How do you interpreour answer? 7. Factoring Receivables [LO3] Your firm has an average collection period of 32 days. Current practice is to factor all receivables immediately at a discount of 1.35 percent. What is the effective cost of borrowing in this case? Assume that default is extremely unlikely 8. Calculating Payments [LO3] Sedman, Corp, has projected the following sales for the coming year 01 02 03 04 Sales $760 $840 $790 $880 Sales in the year following this one are projected to be 15 percent greater in each quarter a. Calculate payments to suppliers assuming that the company places orders during each quarter equal to 30 percent of projected sales for the next quarter. Assume that the company pays immediately. What is the payables period in this case? Q1 Q2 Q3