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Question 7: Elegant Limited is involved into sanitizer manufacturing and the demand for its product has risen drastically due to the recent COVID outbreak. The
Question 7: Elegant Limited is involved into sanitizer manufacturing and the demand for its product has risen drastically due to the recent COVID outbreak. The sales for the company have increased but at the same time, they had sometimes failed to meet the customer demands due to inventory shortage, delay in supplies, or lack of liquidity to purchase raw materials. For the same, the company has appointed a inventory manager to check on several aspects of inventory requirements for Elegant Limited. The inventory manager has the following information for Elegant Limited. Profit and Loss Account Data Balance Sheet Data Beginning of 2021 End of 2021 Inventory 200 220 Accounts receivable 100 130 Sales 2000 Cost of goods sold 1500 Accounts payable 60 65 (1) Considering the available information, calculate inventory period, receivables period, and payables period. Also, suggest what the company can do in terms of inventory management. (ii) What is the duration of the cash cycle for Elegant Limited
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