What was the length of its operating cycle on these general accounting question? AlphaTech Corporation had sales (all on credit) of $50 millionand a gross profit margin of 25% last year. If AlphaTech'sinventory averaged $4.5 million, and its accounts receivablewere $6.2 million, what was the length of its operating cycle?(Assume a 365-day year.)

Step 1: Define Operating CycleThe operating cycle measures the time it takes for a business to…

Answered: AlphaTech Corporation had sales (all on…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Kinber
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Assume the credit terms offered to your firm by your suppliers are 4/20, net 50. Calculate the cost of the trade credit if your firm does not take the discount and pays on day 50. (Hint: Use a 365-day year.) The cost of trade credit is%. (Rounded to two decimal places.) ...
Your company had net sales of $100,000 over the past year. One quarter of the sales were credit sales. During that time, average receivables were $5,000. The accounts receivable balance at the end of the year was $5,000. What was the average collection period? What is the average age of receivables (same answer!)? (Assume a 360-day year) O 18 days O 27 days O 36 days O 72 days O 60 days
he Brenmar Sales Company had a gross profit margin (gross profits÷sales) of 34 percent and sales of $8.3 million last year. 79 percent of the firm's sales are on credit, and the remainder are cash sales. Brenmar's current assets equal $1.5 million, its current liabilities equal a. If Brenmar's accounts receivable equal $563,000, what is its average collection period? b. If Brenmar reduces its average collection period to 25 days, what will be its new level of accounts receivable? c. Brenmar's inventory turnover ratio is 8.9 times. What is the level of Brenmar's inventories? $303,100, and it has $104,400 in cash plus marketable securities.
What is the DSO?
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Atlantic Northern Inc. currently has $715,000 in accounts receivable and generated $4,650,000 in sales (all on credit) during the year that just ended. The firm’s days sales outstanding (DSO) is days. Use 365 days as the length of a year in all calculations. Atlantic Northern Inc.’s CFO is unhappy with its DSO and wants to improve collections next year. Sales are expected to grow by 13% next year, and the CFO wants to lower the DSO to the industry average of 30 days. How much accounts receivable is the firm expected to carry? $453,471 $431,877 $410,283 $388,689
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Libscomb Technologies' annual sales are $5,790,872 and all sales are made on credit, it purchases $3,221,342 of materials each year (and this is its cost of goods sold). Libscomb also has $539,653 of inventory, $498,477 of accounts receivable, and $416,602 of accounts payable. Assume a 365 day year. What is Libscomb’s Inventory Period (in days)?
Libscomb Technologies' annual sales are $6,974,991 and all sales are made on credit, it purchases $3,511,535 of materials each year (and this is its cost of goods sold). Libscomb also has $550,869 of inventory, $522,928 of accounts receivable, and $477,584 of accounts payable. Assume a 365 day year. What is Libscomb’s Inventory Turnover?
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AlphaTech Corporation had sales (all on credit) of $50 million and a gross profit margin of 25% last year. If AlphaTech's inventory averaged $4.5 million, and its accounts receivable were $6.2 million, what was the length of its operating cycle? (Assume a 365-day year.)