17 . Bradco Supply currently has an operating cycle of 62 days. The company is a
ID: 2726506 • Letter: 1
Question
17. Bradco Supply currently has an operating cycle of 62 days. The company is analyzing some operational changes, which are expected to decrease the accounts receivable period by 2 days and increase the inventory period by 5 days. The accounts payable turnover rate is expected to increase from 24 to 28 times per year. If all of these changes are adopted, what will the company's new operating cycle be?
18. Asendia USA has an inventory period of 43 days, an accounts payable period of 28 days, and an accounts receivable turnover rate of 36. What is the length of the cash cycle? (Assume a 365-day year)
19. As of the beginning of the quarter, O’Neill’s Pub Supplies had a cash balance of $460. During the quarter, the company collected $520 from customers and paid suppliers $330. The company also paid an interest payment of $25 and a tax payment of $100. In addition, the company repaid $150 on its long-term debt. What is O’Neill’s cash balance at the end of the quarter?
Explanation / Answer
17)
current operating cycle = 62 ays
account receivable decrease by = 2 days
invnetory increase by =5days
change in account payable form 24 to 28 times
new operating cycle = 62 days - 2 days + 5 days
= 65 days
18) Inventory period =43 days
account payable period = 28 days
account receivable rate = 36
account receivable period = 365/36 = 10 days (approx)
cash cycle =
Cash Conversion Cycle = DSO + DIO – DPO
Where,
DSO is days sales outstanding
DIO is days inventory outstanding
DPO is days payables outstanding
= 43days +10 days - 28 days
= 25 days
19 . cash balance at end of the quarter = cash balance at beginning + collection from customer - payment to suppliers - interest payment - tax payment - loan repayment
= $460 + $520 - $330 - $25 - $100 - $150
= $375
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.