£mSales revenue433.0Cost of sales240.0Average trade receivables86.0Average trade payables20.0Average inventories77.0Purchases210.0 Koch Engineering plc has produced the following information for its most recent financial year:(Click here to view the financial data.)Following a review of the working capital investment of the business, it was decided that liquidity could be improved if the following changes were made:1. An decrease in the average settlement period for trade receivables to 35 days.2. An increase in the average settlement period for trade payables to 50 days.3. A decrease in the average inventories turnover period to 55 days.Calculate the extra cash that the business should generate by implementing each of the proposed changes.(Enter the answes in £m, round to one decimal place.)...Trade receivables = £ mTrade payables = £mInventories = £ m

Financial ratios help to understand the accounting data in a summarised and condensed form. Average…

Answered: Koch Engineering plc has produced the…

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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I need help on this problem. Pearce Enterprises reported the following information for the past year of operation: Transaction Free Cash Flow $250,000 Operating-cash-flow-to-current-liabilities raition 1.0 times Operating-cash-flow-to-capital-expenditures ratio 3.0 times a) Recorded credit sales of $9,000 b) Collected $4,000owed from customers c) Purchased $28,000 of equipment on long-term credit d) Purchased $16,000 of equipment for cash e) Paid $10,000 of wages with cash f) Recorded utility bill of $1,750 that has not been paid For each transaction, indicate whether the ratio will (I) Increase, (D) decrease, or (N) have no effect.
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Best Exports has noticed their current year net income is only $60,000. In order to get a loan from their bank to assist the business they will need to provide a statement of cash flows. In reviewing the statement of cash flows, you notice a large increase ($80,000) in accounts receivable due to two of your largest customers being behind in payments. Since the bank looks at the operating activities, this increase will create concern. You make a suggestion to reclassify the accounts receivables to long-term, thus removing them from current assets will increase the net cash from operations. Under what circumstances would this reclassification be considered ethical or unethical? Support your selection by finding an article which explains your choice.

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