The following company has sales of $30 million and a cost of goods sold of...
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Accounting
The following company has sales of $30 million and a cost of goods sold of $18 million. The balance sheet for period ending 31 December 2018 for this company appears below
| Assets $000 | Liabilities and Shareholder Equity $000 |
| Cash 2500 | Accounts Payable 1600 |
| Accounts Receivable 4400 | Other Payables 900 |
| Inventory 1500 | Accruals 1100 |
| Total Current Assets 8400 | Total Current Liabilities 3600 |
| Property Plant and Equipment 10500 | Long Term Debt 2500 |
| Total Assets 18900 | Total Liabilities 6100 |
|
| Issued Equity 12800 |
|
| Total Liability & Shareholder Equity 18900 |
|
|
|
a. Calculate the companys net working capital in 2018.
b. Calculate the companys cash cycle for 2018.
c. The industry average for accounts receivable is 28 days. What would this companys cash cycle have been in 2018 if it had matched this industry average for accounts receivable? Comment on this new cash cycle outcome against b. above.
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