The Winters Co. has annual sales of £918,700. Cost of goods sold is 55 percent of annual sales and on credit. The firm has an average accounts payable balance of £72,400. How many days on average does it take The Winters Co. to pay its suppliers? (Assume 365 days in a year) A 29 days B 52 days C 34 days D 46 days

The Winters Co. has annual sales of £918,700. Cost of goods sold is 55 percent of annual sales and on credit. The firm has an average accounts payable balance of £72,400. How many days on average does it take The Winters Co. to pay its suppliers? (Assume 365 days in a year) A 29 days B 52 days C 34 days D 46 days

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Net credit sales for Turner Company are $200,000 for the year and the average accounts receivable…

A: Average collection period = Accounts Receivable Turnover Ratio =

Q: 11. Ingram Office Supplies, Inc., buys on terms of 2/15, net 50 days. It does not take discounts,…

A: Costly trade credit period is the difference between the total credit period and free credit period.…

Q: Colby's Manufacturing Company management found that during the last year it took an average of 43…

A: Solution: Cash conversion cycle = Days of inventory outstanding + Days sales outstanding - Days…

Q: Hail and Sons operates for 240 days in a year. It has been offered credit terms of 4/30 net 90 days.…

A: If company provide credit than it is cost to company so company provide discount to the customers to…

Q: A large retailer obtains merchandise under the credit terms of 3/10, net 30, but routinely takes 60…

A: Every business needs goods and services to be purchased for its business. It can be on cash basis or…

Q: RECEIVABLES INVESTMENT McDowell Industries sells on terms of 3 10, net 30. Total sales for the year…

A: Hi student Since there are multiple subparts, we will answer only first three subparts.

Q: pvn.5

A: The objective of the question is to verify the correctness of the given financial ratios and metrics…

Q: Assume the credit terms offered to your firm by your suppliers are 4/20, net 50. Calculate the cost…

A: Hi student Since there are multiple questions, we will answer only first question. If you want…

Q: Receivables Investment Medwig Corporation has a DSO of 30 days. The company averages $7,750 in sales…

A: The objective of the question is to calculate the average accounts receivable for Medwig Corporation…

Q: Grunewald Industries sells on terms of 1/10, net 40. Gross sales last year were $4,453,000 and…

A: According to the question given, we need to compute the nominal and effective costs of trade credit…

Q: Medwig Corporation has a DSO of 17 days. The company averages $7,750 in sales each day (all…

A: Accounts receivable are the people who owe the company. In simple words these are the people who…

Q: PT AWOL has sales projections (in million rupiahs) for the following four quarters: Q1 Q2 Q3 Q4…

A: A cash budget is prepared to present all the expected receipts, payments, and the cash balance at…

Q: Ait Limited has annual credit sales of Ghc5 million and cost of sales of GHC1.8 million. The…

A: Overdraft could be a credit extension from a bank to its bank account holders. The credit is…

Q: (16-11) Cash Conversion Negus Enterprises has an inventory conversion period of 50 days, an average…

A: Number of days 365 Days Divided by: Average collection period 35 Days Accounts receivable…

Q: A firm has no cash sales (all sales are on credit and are collected 28 days after the sale). If the…

A: Average collection period is one of efficiency ratio which is used in business. This shows time…

Q: 3) A large retailer obtains merchandise under the credit terms of 3/10, net 30, but routinely takes…

A: Discount Rate = 3% Discount Period = 10 days Credit Period = 50 days

Q: Receivables Investment Medwig Corporation has a DSO of 37 days. The company averages $9,750 in…

A: Accounts Receivables are the money due towards customers but not yet paid on account of goods sold…

Q: What is the receivales turnover and what is the average collection period (days sales outstanding) ?

A: Information Provided: Credit sales = $10,640,000 Receivables = $1,520,000

Q: Rooney Ltd has recorded the following sales for the first three months of 2011: January £30,000…

A: In this question, we need to compute the amount expected to be received in March 2011. This is…

Q: Bumpas Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 5/10,…

A: Trade credit is a type of credit that is extended by a business to its customers. It allows…

Q: Medwig Corporation has a DSO of 21 days. The company averages $5,250 in sales each day (all…

A: DSO = 21 days Daily sale = $ 5,250 Annual sale = 5250*365 = $ 1,916,250

Q: Your Office Supply has a $42,500 line of credit that charges an annual percentage rate of prime rate…

A: Calculate the rate of interest per month:

Concept explainers

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.

Question

3. The Winters Co. has annual sales of £918,700. Cost of goods sold is 55 percent of annual sales and on credit. The firm has an average accounts payable balance of £72,400. How many days on average does it take The Winters Co. to pay its suppliers? (Assume 365 days in a year)

A		29 days
B		52 days
C		34 days
D		46 days

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

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.

Similar questions

Aggarwal Inc. buys on terms of 2/10, net 30, and it always pays on the 30th day. The CFO calculates that the average amount of costly trade credit carried is $350,000. What is the firm's average accounts payable balance? Assume a 365-day year. Please explain process and show calculations.
A firm has an ACP of 38 days and its annual sales are $5.3 million. What is its account receivable balance? Multiple Choice $551,781 $619,304 $692,098 $759,021
The Caccamisse Corporation has annual credit sales of $35 million. The average collection period is 37 days. What is the average investment in accounts receivable as shown on the balance sheet? Assume 365 days per year. Note: Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.
If a firm has sales of $21,752,000 a year, and the average collection period for the industry is 45 days, what should this firm’s accounts receivable be if the firm is comparable to the industry? Assume there are 365 days in a year. Do not round intermediate calculations. Round your answer to the nearest dollar.
A firm has the following monthly pattern of sales: January $ 200 February 300 March 600 April 1,200 May 600 June 300 Sixty percent of the sales are on credit and are collected after a month. The company pays wages each month that are 60 percent of sales and has fixed disbursements (for example, rent) of $150 a month. In March it receives $250 from a bond that matures; in April and June it makes a tax payment of $150. Management maintains a cash balance of $200 at all times. Construct a cash budget that indicates the firm’s monthly needs for short-term financing. Its beginning cash position is $200. Round your answers to the nearest dollar. Enter the disbursements values in Part 2 and desired level of cash in Part 3 as positive values. Use a minus sign to enter cash outflows, shortage of cash values, negative initial and ending cash positions in Part 3, if any. Do not leave any cells blank. If the answer is zero, enter "0". Part 1 January February…
Cost of Trade Credit Grunewald Industries sells on terms of 2/10, net 50. Gross sales last year were $4,526,000 and accounts receivable averaged $434,000. Half of Grunewald's customers paid on the 10th day and took discounts. What are the nominal and effective costs of trade credit to Grunewald's nondiscount customers? (Hint: Calculate daily sales based on a 365-day year, calculate the average receivables for discount customers, and then find the DSO for the nondiscount customers.) Do not round intermediate calculations. Round your answers to two decimal places. Nominal cost of trade credit: % Effective cost of trade credit: %
The Malibu Corporation has annual credit sales of $36 million. The average collection period is 38 days. What is the average investment in accounts receivable as shown on the balance sheet?
Company XYZ has annual credit sales of $2,500,000. Collection of the credit sales are evenly spread out over the 250 working days per year. The company’s annual cost of borrowing is 7%. How much would XYZ save each year by improving its receivables process by one day?
Aggarwal Inc. buys on terms of 1/10, net 20, and it always pays on the 20th day. The CFO calculates that the average amount of costly trade credit carried is $750,000. What is the firm's average accounts payable balance? Assume a 365-day year. a. $1,000,000 b. $1,492,500 c. $1,500,000 d. $1,125,000 e. $1,113,750
Lupo, Inc., has an average collection period of 52 days. Its average daily investment in receivables is $70,300. Assume 365 days per year. a. What is the receivables turnover? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) b. What are annual credit sales? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
13. Turnip Co.'s average collection period is 20 days. The average daily sales is P5,000. All of the firm's customers pay by credit card. How much is the firm's average A/R balance? A. P250 В. Р5,000 С. Р50,000 D. P100,000
Bumpas Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 4/10, net 65. If the firm chooses to pay on time but does not take the discount, what is the effective annual percentage cost of its non-free trade credit? (Assume a 365-day year.) a. 21.98% b. 27.65% c. 29.49% d. 31.12% e. 28.46%