1. Answer the following questions using the above financial statements. Round yo
ID: 2382612 • Letter: 1
Question
1.
Answer the following questions using the above financial statements.
Round your answer to the nearest 2 decimal places. DO NOT round until after all calculations have been completed and you have reached your final answer. If your answer ends in a zero, only include 1 decimal place and omit the zero. If the answer ends in two zeros after rounding, do not use any decimal places as ANGEL does not recognize the ".00" endings and will remove points from your score.
1.
Assets 2012 2013 Cash 45 50 A/R 352 254 Inventory 219 321 Total 616 625 Net Fixed Assets 1000 1200 Total Assets 1616 1825 Liabilities 2012 2013 Accounts Payable 188 169 Notes Payable 150 125 Total 338 294 Long-Term Debt 500 750 Common Stock 400 400 Retained Earnings 378 381 1616 1825 2013 Sales 2982 Cost of Goods Sold 2386 Depreciation 200 EBIT 396 Interest 80 Taxes 60 Net Income 256Answer the following questions using the above financial statements.
Round your answer to the nearest 2 decimal places. DO NOT round until after all calculations have been completed and you have reached your final answer. If your answer ends in a zero, only include 1 decimal place and omit the zero. If the answer ends in two zeros after rounding, do not use any decimal places as ANGEL does not recognize the ".00" endings and will remove points from your score.
Inventory Turnover?
AR Turnover?
AP Turnover?
Inventory Period?
AR Period?
Operating Cycle?
Cash Cycle?
What is Net Working Capital for 2013?
Explanation / Answer
1. Inventory Turnover= Cost of Goods Sold / Average Inventory= 2386 / 270= 8.837037 times
2. AR Turnover= Total Yearly Credit Sales / Average AR = 2982 / 303 = 9.841584 times
3. AP Turnover= Total Yearly Credit Purchases / Average AP
Opening Inventory + Total Yearly Purchases - Closing Inventory= Cost of Goods Sold
219 + Total Yearly Purchases -321 = 2386; Thus, Total Yearly Purchases= 2386+321-219 = $2488
Thus, AP Turnover = 2488 / 178.5 = 13.93838 times
4. Inventory Period= (Average Inventory / Total Yearly Purchases) * 365 days of a financial year= (270 / 2488) * 365 days= 39.61 days; .......... Assuming Purchases made are evenly spread throughout the year
5. AR Period = (Average AR / Yearly Credit Sales) * 365 days of a financial year= (303 / 2982) * 365 days = 37.09 days; ........... Assuming Credit Sales made are evenly spread throughout the year
6. Operating Cycle = Inventory Period + Average AR Days - Average Payable Days = 39.61 days + 37.09 days- [(316 / 2488) * 365 days] = 39.61 days + 37.09 days - 46.36 days = 30.34 days .........Average Payables days is calculated after reckoning both average Account Payables days and average Notes payable days.
7. Cash Cycle = Inventory Period + AR Period = 39.61 days + 37.09 days = 76.7 days
8. Net Working Capital for 2013 = Total Current Assets - Total Current Liabilities including Short-term Debt and Current Maturity of Long-term Debt
= (50+ 254 +321) - (169 + 125) = 625 - 294 = 331; Thus, Net Working Capital for 2013 = $331.
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