nslc Part B Pete\'s Nursery, Inc. Balance Sheets in $000s) As At December 31 20Y
ID: 2332322 • Letter: N
Question
nslc Part B Pete's Nursery, Inc. Balance Sheets in $000s) As At December 31 20Y3 ASSETS Current assets 100 417 $ 66 123 303 461 70 107967 Accounts receivable Inventory Other current assets 376 547 Total current assets Fixed assets Other noncurrent assets 245 71 316 107 Total noncurrent assets TOTALASSETS LIABILITIES AND OWNERS EQUITY Current liabilities Current portion-LTD Notes payable Accounts payable Accrued expenses Other current liabilities 67 67 101 244 148 S7 47 204 28 368 Noncurrent liabilities Long-term debt Other noncurrent labilities 330 20 397 19 416 482 Total noncurrent liabilities 784 801 Total liabilities Owners' equity TOTAL LIABILITIES AND OWNERS' EQUITY 639 501 389 1,516 1,285 1,190 $610 496 452 Working investment Pete's Nursery, Inc. 3 Omega Performance Corporation Al Rights ReservedExplanation / Answer
COGS(Cost of goods sold) 20Y1=1,773 20Y2=2,093 20Y3=2,467 Inventory: 20Y1=417 20Y2=461 20Y3=547 Inventory turnover ratio: 20Y1=1773/417=4.2518 20Y2=2093/461=4.54013 20Y3=2467/547=4.510055 Inventory days in hand: 20Y1=365/4.2518=85.85 20Y2=365/4.54013=80.39 20Y3=365/4.510055=80.93 The Income statement and balance sheet figures are used so far which are in thousands of dollar Holding period in 20Y3 has increased by (80.93-80.39)=0.54 days compared to 20Y2 Holding period in 20Y3 has decreased by (85.85-80.93)=4.92 days compared to 20Y1 COGS in 2013=$2,467,000 COGS per day=($2467000/365)= $ 6,758.90 When inventory holding period is increased by 0.54 days, financing need increased by($6758.90*0.54)=$3,649 When inventory holding period is decreased by 4.92 days, Financing need is decreased by ($6758.90*4.92)=$33,253 In this case change of inventory holding period in 20Y3 is compared with 20Y1 This will result in decrease in financing needs by $33253
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