Question 8 (10 marks) The following information is extracted from the financial statements of XP...
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Accounting
Question 8 (10 marks)
The following information is extracted from the financial statements of XP Sports Limited:
Cash
$677,423
Accounts Payable
$1,721,669
Accounts Receivable
$1,845,113
Notes Payable
$2,113,345
Inventories
$1,312,478
Total Current Assets
$3,835,014
Total Current Liabilities
$3,835,014
Net Sales
$9,912,332
Cost
$5,947,399
Briefly explain what you understand by the term operating cycle. (2 marks)
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What is the operating cycle for XP Sports Limited? (2 marks)
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What can you say about XP Sports accounts receivable and inventory management if it is known that the industry average operating cycle is 72 days? (1 mark)
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Briefly explain what you understand by the cash conversion cycle. (2 marks)
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What is the cash conversion cycle for XP Sports Limited? (2 marks)
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What can you say about XP Sports cash conversion cycle if it is known that the industry average cash conversion cycle is 42 days? (1 mark)
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