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Tableview Surfing Sports operates in the highly seasonal surfing and surfing board equipment manufacturing industry....

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Accounting

Tableview Surfing Sports operates in the highly seasonal surfing and surfing board equipment manufacturing industry. Although Tableview Surfing's sales are highly seasonal, to obtain production efficiencies it produces surfing and surfing board equipment evenly throughout the year. Below is summary quarterly financial information for Tableview Surfing Supports.

Tableview Surfing Sports (Rand thousands)

Q1

Q2

Q3

Q4

Sales

5,000

3,000

4,000

12,000

(percent of annual)

20%

10%

10%

60%

Cost of Goods Sold

2,560

1,320

1,320

7,500

Accounts Receivable

1,600

750

800

3,200

Inventory

2,650

4,600

6,500

2,400

Accounts Payable

520

520

520

520

a. Calculate Tableview's collection period, days inventory outstanding, and payables period for each quarter. For simplicity, assume that each quarter has 90 days. (4 marks)

b. Calculate Tableview's operating cycle and cash conversion cycle for each quarter. How do they vary by quarter, and why? (4 marks) c. How is this pattern in the cash conversion cycle likely to affect Tableview's need for funding? (2 marks)

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