The following information is to be used for answering questions 24 to 30 inclusi
ID: 2395683 • Letter: T
Question
The following information is to be used for answering questions 24 to 30 inclusive
Cash 20,000
Accounts Receivable 40,000
Inventories 40,000
Current Assets 100,000
Accounts Payable 30,000
Accruals 10,000
Notes Payable 40,000
Current Liabilities 80,000
Sales 250,000
Cost of Goods Sold 170,000
The current ratio is 1.25
DSO is 58.4 days
DIH is 85.9 days
OC is 144.4 days
4. The company's days payable outstanding (DPO) is__?
6. The company's cash conversion cycle (CCCC) is__?
7. The company's working capital requirement is__?
Explanation / Answer
Days Payable Outstanding =
Ending Accounts Payable/(Cost of sales/Number of days)
Ending Accounts Payable
$ 30,000.00
Cost of sales
$ 170,000.00
($ 30000/($ 170000/365))
DPO=
64.41
Days
64 days (Approx)
Cash Conversion Cycle =
DIO+DSO-DPO
DIO
85.88 Days
DSO
58.4 Days
DPO
64.41 Days
Calculation of DIO
(Inventory/(Cost of sales/365))
(40000/(170000/365))
85.88
Calculation of CCC =
DIO+DSO-DPO
(85.88+58.4-64.41)
79.87
Days
Working Capital requirement =
Current Assets-Current Liabilities
($ 100000-$ 80000)
$ 20,000.00
Answers
4. The company's days payable outstanding (DPO) is 64 Days.
6. The company's cash conversion cycle (CCCC) is 79.87 Days
7. The company's working capital requirement is $ 20000.
Days Payable Outstanding =
Ending Accounts Payable/(Cost of sales/Number of days)
Ending Accounts Payable
$ 30,000.00
Cost of sales
$ 170,000.00
($ 30000/($ 170000/365))
DPO=
64.41
Days
64 days (Approx)
Cash Conversion Cycle =
DIO+DSO-DPO
DIO
85.88 Days
DSO
58.4 Days
DPO
64.41 Days
Calculation of DIO
(Inventory/(Cost of sales/365))
(40000/(170000/365))
85.88
Calculation of CCC =
DIO+DSO-DPO
(85.88+58.4-64.41)
79.87
Days
Working Capital requirement =
Current Assets-Current Liabilities
($ 100000-$ 80000)
$ 20,000.00
Answers
4. The company's days payable outstanding (DPO) is 64 Days.
6. The company's cash conversion cycle (CCCC) is 79.87 Days
7. The company's working capital requirement is $ 20000.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.