Canadian Bacon Inc. financial statements are presented in the table below. Based
ID: 2655445 • Letter: C
Question
Canadian Bacon Inc. financial statements are presented in the table below.
Based on the information in the table, and using a 365-day year, calculate cash conversion cycle
Round the answers to two decimal places
Balance Sheet December 31, 2015
Income Statement, Year of 2015
Cash and marketable securities $187,000 Accounts payable $217,000 Accounts receivable $498,000 Notes payable $51,500 Inventories $799,000 Accrued expenses $58,300 Prepaid expenses $19,300 Total current liabilities $326,800 Total current assets $1,503,300 Long-term debt $215,400 Gross fixed assets $1,978,000 Par value and paid-in-capital $128,000 Less: accumulated depreciation $478,000 Retained Earnings $2,333,100 Net fixed assets $1,500,000 Common Equity 2,461,100 Total assets $3,003,300 Total liabilities and owner’s equity $3,003,300Explanation / Answer
Answer:
Cash conversion cycle=Days inventory outstanding+Days sales outstanding+Days payable outstanding
=78.49 days+=33.73 days+=33.58 days
=145.8 days
Account receivable Turnover ratio=Net credit sales/Average accounts receivable
=$5,386,600/$498,000
=10.82 times
Days sales outstanding =365 days/Account receivable Turnover ratio
=365/10.82
=33.73 days
Inventory turnover ratio =Net cogs/Average inventory
=$3,716,754.00/$799,000
=4.65 times
Days inventory outstanding=365 days/Inventory turnover ratio
=365/4.65
=78.49 days
Accounts payable ratio=Net credit purchase/Average accounts payable
=($3,716,754.00-$799000)/($217,000+$51500)
=2917754/268500
=10.87 times
Days payable outstanding=365 days/Accounts payable ratio
=365/10.87
=33.58 days
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.