s Window Help Cengageow Online teaching and learning resource from Cengage Learn

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s Window Help Cengageow Online teaching and learning resource from Cengage Learning i Chapter 10 Assignment Assignment Score: 77A ave Exit Submit Assignment for Gradis ZExercise 10-15 Check My Work Exercise 10-15 Measuring Short-Term Liquidity In 2013, Copa Company had current assets of $155,000 and current Hoblities of $100,000, of which accounts payable were $65,000. Cost of goods sold was $425,000, merchandise inventory increased by $40,000, and accounts payeble were $55,000 in the prior year. In 2014, Copia had curent essets of $210,000 and current liabilities of $160,000, of which accounts payable were $75,000. Cost of goods sold was $475,000, and merchandise inventory decreased by $15,000. Calculate Copia's working capital, payables turnover, and days' payable for 2013 and 2014. Round your answers for payabies turnover and days peyabile to one dedimal place. Use rounded payables turnover answers to calculate the days payable. Assume there are 365 days in a year Working capital Payables turnover Days payable Assess Copla's liquidity and cash flows in relation to the change in the payables turnover from 2013 to 2014 The input in the bex below will not be graded, but may be reviewed and considered by your instructor 3 tim 3 days 3 deys Partially Correet 5 6 8 3 0

Explanation / Answer

Solution:

Working Capital = Current Assets - Current liabilities

For year ended 2013

Working Capital = $ 155000 - $ 100000 = $ 55000

For year ended 2014

Working Capital = $ 210000 - $ 160000 = $ 50000

Creditors (Payable) Turnover Ratio = Cost of Goods Sold/ (Opening Accounts Payable + Closing Accounts payable)/2

For year ended 2013 - $ 425000/($ 55000 + $ 65000)/2 = $ 425000/$ 60000 = 7.08 times

For year ended 2014 - $ 475000/ ($ 65000+ $ 75000)/2 = $ 475000/ $ 70000 = 6.8 times

Creditor days payable = 365 days/Creditors Turnover Ratio

For year ended 2013 = 365/7.08 = 51.5 days

For year ended 2014 = 365/6.8 = 53.7 days

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