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Answers

Chaapter 223

Exxampple 1

XYZZ has the ffollowing fiigures fromm its most rrecent acccounts.

Reqquired:
Usee this infoormation too answer the illustrrations below, to ca alculate the
releevant worrking capittal ratios.
Rouund your answers tto the neaarest day.

$mm
Aveerage tradee receivables 4
Aveerage tradee payabless 2
Aveerage raw material innventory 1
Aveerage WIP inventory 1.3
Aveerage finishhed goodss inventory 2
Sales (80% oon credit) 30
Materials usaage 20
Materials purcchases (all on credit)) 18
Prooduction coost 23
Cosst of sales 25

(1) Calculatte the raw materials hholding period.
(2) Calculatte the WIP holding peeriod.

(3) Calculatte the finishhed goodss inventory holding peeriod.
(4) Calculatte the tradee receivable days.

(5) Calculatte the tradee payable d days.

501