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Ait Limited has annual credit sales of Ghc5 million and cost of sales of GHC1.8...

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Accounting

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Ait Limited has annual credit sales of Ghc5 million and cost of sales of GHC1.8 million. The company's current assets consist of inventory and trade receivables. Current liabilities consist of accounts payables and an overdraft facility with an average interest rate of 10% per annum. The company gives 60 days credit to its customers and is allowed an average of 30 days credit by trade suppliers. The company has an operating cycle of 90 days. The current ratio of Ait Ltd 1.5:1, the cost of long-term finance to Ait Ltd is 12% per annum Calculate the size of the overdraft of Ait Ltd

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