Walmart Stores Inc. (NYSE: WMT) is all about inventories. Use the information gi
ID: 1171555 • Letter: W
Question
Walmart Stores Inc. (NYSE: WMT) is all about inventories. Use the information given to find its operating cycle assuming all sales are cash sales. How many days does it take WMT to sell its inventory? How many days does it take WMT to recover its cash from AR? How many days is the WMT operating cycle? Revenue Cost of revenue Inventories as at 31 January 2013 Inventories as at 31 January 2012 Average inventories Accounts receivable as at 31 January 2013 Accounts receivable as at 31 January 2012 Average accounts receivable USD in million 469,162 352,488 43,803 40,714 42,259 6,768 5,937 6,353Explanation / Answer
Answer a.
Days’ Sales of Inventory = 365 * Average Inventories / Cost of Revenue
Days’ Sales of Inventory = 365 * $42,259 / $352,488
Days’ Sales of Inventory = 43.76 days
Answer b.
Days’ Sales Outstanding = 365 * Average Accounts Receivable / Revenue
Days’ Sales Outstanding = 365 * $6,353 / $469,162
Days’ Sales Outstanding = 4.94 days
Answer c.
Operating Cycle = Days’ Sales of Inventory + Days’ Sales Outstanding
Operating Cycle = 43.76 days + 4.94 days
Operating Cycle = 48.70 days
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