Question

During the Covid-19 and its associate financial crisis, Boakye Acheampong, chairman of the Federal Reserve, said that shortening the cash cycle and better use of working capital are the most important factors as private-sector businesses struggle to overcome the current economic volatility and difficulty in accessing capital markets.

Considering how important working capital management is, Asempa Company Limited decided to evaluate the amount of working capital being used in the firm and explore the prospects of how its working capital will be financed.

Asempa Company Limited reported the following results for current assets and liabilities on its most recent Statement of Financial Position. Interestingly, the company's sales did not change, it reported sales of Ghc11,100 for its most recent year as well as for the previous year.

The columns labeled Ending (Ghc) show results at the end of the most recent year, and the columns labeled Beginning (Ghc) show results at the end of the previous year.

	Beginning (Ghc)	Ending (Ghc)		Beginning (Ghc)	Ending (Ghc)
Current assets			Current liabilities
Cash	2,600	5,000	Accounts payable	4,800	4,900
Accounts receivable	5,000	4,000	Notes payable	3,200	3,600
Inventory	3,900	3,400	Accruals	0	0

Using the information given and a 365-day year, calculate days of working capital, net working capital, and net operating working capital for Asempa Company Limited. Use the calculations to complete the following statements:

a. Asempa Company Limited days of working capital improved from _____ days in the previous year to _____ days at the end of the most recent year.

b. The company's net working capital increased from Ghc3,500.00 in the previous year to _____ at the end of last year.

c. Asempa Company Limited net operating working capital increased from _____ in the previous year to Ghc7,500.00 at the end of last year.