ABC Inc. is evaluating its financing needs. To do this, the company must determine the amount of time it will need to finance its inventory. ABC Inc. had the following information.
Beginning Inventory = 225,000; Ending Inventory = 270,000
Beginning Accounts Receivable = 180,000; Ending Accounts Receivable = 200,000
Beginning Accounts Payable= 75,000; Ending Accounts Payable= 100,000
Net sales = 1,100,000; Cost of Goods sold = 850,000
A. What is ABC Inc.’s Inventory period? (Hint: 365 / Inventory Turnover)
B. What is ABC Inc.’s Receivables period? (Hint: 365 / Receivables Turnover)
C. What is ABC Inc.’s Operating cycle? (Hint: Inventory Period + Accounts Receivable Period)
D. What is ABC Inc.’s Payables period? (Hint: 365 / Payables Turnover)
E. What is ABC Inc.’s Cash cycle? (Hint: Operating cycle – Accounts payable period)