Window Help D Sat 11:55 AM a CergugelNow i Online teaching and learning resource

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Window Help D Sat 11:55 AM a CergugelNow i Online teaching and learning resource from Cengage Learning apter 10 Assignment ssignment Soore: 68.44 SaveExit Scbmit Assignment for Grading Question 15 of 1s xercise 10-15 Check My Work Exercise 10-15 Measuring Short-Term Liquidity tn 2013, Copia Company had current assets of $155,000 and current labilities of $100,000, of which accounts payable were s6 and accounts payable were $55,000 in the prior year. In 2014, Copie had current assets of $210,000 and inventory decreased by $15,0oo payables turnover and days' payable to one decimal current liabilities of $160,000, of which accounts payable were $75,000. Cost of goods soid was $475,000, and merchandise Calculate Copia's working capital, payables turnover, and days payable for 2013 and 2014. Round your answers for place. Use rounded payables tunover a answers to calculate the days' payable. Assume there are 365 days in a year Working capital Payables turnover Days' payable Assess Copia's liquidity and cash flows in relation to the change in the payables turnover from 2013 to 2014 The input in the box below will not be graded, but may be reviewed and considered by your instructor days Check My Work 0

Explanation / Answer

Working capital:current assets-current liabilities

For 2013:$155000-$100000=$55000

For 2014:$210000-$160000=$50000

Accounts payables turnover:

Credit purchase/average payables

2013:(Cost goods sold+ increase in inventory)/AVG. Payables

=$(425000+40000)/$((65000+55000)/2)

=7.75 times

2014:(cost of goods-decrease in inventory)/AVG payables

$(475000-15000)/$((75000+65000)/2)

=6.57 times.

Days payable:365/payables turnover

2013:365/7.75 times=47 days(approx.)

2014:365 days/6.57 times=56 days(approx.)

Accounts payable are desired to be high as the high implies more healthy payments.Hence, compare to 2013,2014 ratio is low which signs that there is problem for liquidity and cash flows.

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