question archive Question 1 Discuss temporary and permanent working capital
Question 1 Discuss temporary and permanent working capital
Subject:AccountingPrice:9.82 Bought3
Question 1
Discuss temporary and permanent working capital.
Question 2
The summarized current assets and current liabilities of Newton Blid as as follows :
Current assets RM
Cash and marketable securities 50,000
Accounts receivable 7'5,000
Inventory 67,000
Total current assets 192,000
Current liabilities
Accounts payable 48,000
Bank loan 66,000
Accruals 15,000
Total current liabilities 121,000
Sales. for the firm amount to RM 300,000 and cost of goods sold is 45% of sales.The payable deferral period is :13 days.
Required:
a. Compute the firm's operating cycle
b. Compute the firm's cash conversion cycle
Question 3
The following are information SM Products Bhd's inventory turnover days, debtorsr collection period and payables credit period
Inventory turnover days : 90 days
Accounts receivable : 50 days
Account payable : 30 days
The firm has annual sales of about RM30 million .
a. Calculate the firm's operating cycle
b. Calculate the firm's cash conversion cycle
c. With the help of a diagram, explain the concepts of cash conversion cycle and working capital .1" operating cycle
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Answer
The operating cycle is the number of days between when you buy inventory and when customers pay for the inventory. The cash conversion cycle is the number of days between when you pay for inventory and when you get paid by your customers for the inventory.
Date Page- Solution Scurrent Receivable Turnonce ( ART Nu- coredil sales Account - Receivable , " " least 10 067 Debtor days 365 ART 365 34 days 10 062 Vita Inventory X 365 67000 x 360 2 68 days firms operating cycle 34 + 68 102 days Signature
