The financial statements of Harris News, Inc include the following Rems (Cick th

Question

The financial statements of Harris News, Inc include the following Rems (Cick the icon, to view the financial statements) Read the Toqurement Now, select the formulia and then entor the amounts to calculate days' payable ouestanding (DPO) (Enter aos to two decimal places and use a 365 day year Round your inal answers to the nearest whole number) 2016 2015 in year 365 365 Accounts payable turnover 6 11 Days' payable outstanding (DPO 60 11.48 g. Cash conversion cydle (in days) (Abbreviations used Avg average and ST-short ) 2016 2015 Choose trom any ist or enter any number in the input fekds and then cick Check Answer. Clear All Check Answer re to search

Explanation / Answer

Calculation of Days Receivable Outstanding for 2015 & 2016 Days receivable outstanding = 365 days / Account Receivable turnover Accounts Receivable turnover for 2016 = Net Credit sales / Average Receivables = $500000/$80500 = 6.21 Days receivable outstanding for 2016 = 365 days / 6.21 = 59 days Accounts Receivable turnover for 2015 = Net Credit sales / Average Receivables = $511000/$71000 = 6.21 Days receivable outstanding for 2016 = 365 days / 7.20 = 51 days Calculation of Days Inventory Outstanding for 2015 & 2016 Days Inventory Outstanding = 365 days / Inventory Turnover ratio Inventory Turnover ratio for 2016 = Cost of goods sold / Average Inventory = $275000 / $85500 = 3.22 Days Inventory Outstanding for 2016 = 365 days / 3.22 = 113 days Inventory Turnover ratio for 2015 = Cost of goods sold / Average Inventory = $287000 / $69500 = 4.13 Days Inventory Outstanding for 2015 = 365 days / 4.13 = 88 days Calculation of Cash Conversion cycle for 2015 & 2016 Cash conversion cycle = Days receivable outstanding + Days Inventory Outstanding - Days Payable Outstanding Cash conversion cycle for 2015 = 51 days + 88 days - 32 days = 107 days Cash conversion cycle for 2016 = 59 days + 113 days - 60 days = 110 days

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