A manufacturing company has the following information relating to its working capital andrates of turnover:Components of working CapitalValueZMKRaw materialsWork in ProgressFinished goods stock17,81024,66037,260Full-screen SnipPeriod between despatch and invoice to customer2 daysTrade debtorsTrade creditors219,180113,970Measures of annual turnover and throughput:SalesCost of salesMaterial purchasesZMK2.0millionZMK1.7millionZMK1.3millionRequired:Calculate the working capital cycle (assume 365 days in a year, and assume that the value ofwork in progress is equal to the cost of material plus 50% of the cost of converting materialsinto finished goods).

Working Capital Cycle In a simple term work capital cycle which describes as total time to convert…

Measures of annual turnover and throughput: Sales ZMK2.0million Cost of sales ZMK1.7million Material purchases ZMK1.3million Required: Calculate the working capital cycle (assume 365 days in a year, and assume that the value of

Measures of annual turnover and throughput: Sales ZMK2.0million Cost of sales ZMK1.7million Material purchases ZMK1.3million Required: Calculate the working capital cycle (assume 365 days in a year, and assume that the value of

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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Question

A manufacturing company has the following information relating to its working capital and
rates of turnover:
Components of working Capital
Value
ZMK
Raw materials
Work in Progress
Finished goods stock
17,810
24,660
37,260
Full-screen Snip
Period between despatch and invoice to customer
2 days
Trade debtors
Trade creditors
219,180
113,970
Measures of annual turnover and throughput:
Sales
Cost of sales
Material purchases
ZMK2.0million
ZMK1.7million
ZMK1.3million
Required:
Calculate the working capital cycle (assume 365 days in a year, and assume that the value of
work in progress is equal to the cost of material plus 50% of the cost of converting materials
into finished goods).

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