Question

The following information is extracted from the financial statement of XP Sports Limited.

Cash $677423 Account Payable $1721669

Account Receivable $1845113 Note Payable $2113345

Inventories $1312478

Total current Assets $3835014 Total current Liabilities $3835014

Net Sales $9912332

Cost $5947399

a) Briefly explain what you understand by the term 'operating cycle'?

b) What is the Operating cycle for XP sports limited?

c) What can you say about XP sports accountants receivable and inventory management if it is known that the industry average operating cycle is 72 days?

d) Briefly explain what you understand by the 'Cash conversion cycle' ?

e) What is the cash conversion cycle for XP Sports Limited?

f) What can you say about XP Sports cash conversion cycle if it is known that the industry average cash conversion is 42 days ?