inventory levels.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Topic Video
Question

Hi this is one question. The excel sheet is the data to answer the question

Quarterly Working Capital Schedule
All figures in USD thousands unless stated
Days in Period
Revenue
COGS
AMOUNTS PER DAY
Accounts Receivable
Inventory
TOTAL AMOUNTS
Accounts Receivable
Inventory
(Days)
(Days)
2021
Q1
91.25
10
9
2,487
1,135
2021
Q2
91.25
10
9
2,579
1,165
2021
Q3
91.25
10
9
2,688
1,196
2021
Q4
91.25
12 11
3,389
1,610
2022
Q1
91.25
12
11
3,457
1,662
2022
Q2
91.25
12
11
3,526
1,715
2022
Q3
91.25
12
11
3,579
1,760
2022
Q4
91.25
12 11
3,615
1,806
Transcribed Image Text:Quarterly Working Capital Schedule All figures in USD thousands unless stated Days in Period Revenue COGS AMOUNTS PER DAY Accounts Receivable Inventory TOTAL AMOUNTS Accounts Receivable Inventory (Days) (Days) 2021 Q1 91.25 10 9 2,487 1,135 2021 Q2 91.25 10 9 2,579 1,165 2021 Q3 91.25 10 9 2,688 1,196 2021 Q4 91.25 12 11 3,389 1,610 2022 Q1 91.25 12 11 3,457 1,662 2022 Q2 91.25 12 11 3,526 1,715 2022 Q3 91.25 12 11 3,579 1,760 2022 Q4 91.25 12 11 3,615 1,806
10
Why would an increase in a businesses' days in inventory consume cash?
The market is becoming increasingly competitive.
The business is expending cash to build up its inventory levels.
This is a non-cash item on the balance sheet, and therefore not applicable.
The company is collecting on its credit sales faster.
Transcribed Image Text:10 Why would an increase in a businesses' days in inventory consume cash? The market is becoming increasingly competitive. The business is expending cash to build up its inventory levels. This is a non-cash item on the balance sheet, and therefore not applicable. The company is collecting on its credit sales faster.
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Accounting for Merchandise Inventory
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education