Question

Consider the following financial statement information for the Zamboni Icers Corporation: Item Beginning Ending Inventory $...

Consider the following financial statement information for the Zamboni Icers Corporation:

Item Beginning Ending
Inventory $ 11,300 $ 12,300
Accounts receivable 6,300 6,600
Accounts payable 8,500 8,900
Net sales $ 93,000
Cost of goods sold 73,000

  
All sales are on credit.

Calculate the operating and cash cycles. (Use 365 days a year. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Operating cycle ____________ days
Cash cycle ____________ days
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Homework Answers

Answer #1
Average Inventory [beginning+ending ]/2 [11300+12300]/2=11800
Average receivable [[6300+6600]/2=6450
Average payable [8500+8900]/2=8700

1)Operating cycle :Days in inventory +days in receivables

[365/(cost of goods sold /Average inventory)]+ [365 /(credit sales /average receivable]

[365 /(73000/11800)]+ [365/(93000/6450)]

[365 / 6.18644]+ [365/14.41860]

59+ 25.31

84.31days

cash cycle : Operating cycle - days in payables

OC -[365/(cost of goods sold /average payables)]

84.31- [365/(73000/8700)]

84.31- [365 /8.39080]

84.31 - 43.50

40.81 days

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