Assume that ABC Corporation pays for each purchase three (3) weeks after date of purchase. Maintains its inventory at a level equal to 9-day sales and are made on a 30-day charge basis.How long the cash cycle is and how many cash cycles it has in one year? Solution:2. If ABC Corporation has annual credit sales of Ᵽ990,000 and its average accounts receivable is Ᵽ100,000, how many is its average collection period? Assuming that receivable turnover rate increases by 25%, how much would then be the estimated change in accounts receivable.Solution:3. The following data are available from the records of ABC Corporation Annual sales Ᵽ 396,000Cost 70%Average inventory 50,000Based on the above information determine the following:a) Number of days sales in average inventoryb) Average inventory assuming that desired inventory turnover rateis 12x in one year. Solution:

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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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Assume that ABC Corporation pays for each purchase three (3) weeks after date of purchase. Maintains its inventory at a level equal to 9-day sales and are made on a 30-day charge basis.
How long the cash cycle is and how many cash cycles it has in one year? Solution:
2. If ABC Corporation has annual credit sales of Ᵽ990,000 and its average accounts receivable is Ᵽ100,000, how many is its average collection period? Assuming that receivable turnover rate increases by 25%, how much would then be the estimated change in accounts receivable.
Solution:
3. The following data are available from the records of ABC Corporation Annual sales Ᵽ 396,000
Cost 70%
Average inventory 50,000
Based on the above information determine the following:
a) Number of days sales in average inventory
b) Average inventory assuming that desired inventory turnover rate
is 12x in one year. Solution:

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