BUSI 2503 Study Guide - Final Guide: Cash Conversion Cycle, Retained Earnings, Extended Periodic Table

• School: Carleton University
• Department: Business
• Course: BUSI 2503
• Professor: Issac Otchere

Document Summary

,500 increase: ,000 decline, unchanged, unchanged, million increase. Inventories of raw materials, work in progress, and finished goods increase and cash decreases (use of cash). Trade receivables increase (use of cash): decrease in assets (land), increase in cash (source of cash), and decrease in shareholders" equity when the loss on the land is recognized. The loss on the land has no impact on cash. Shareholders" equity decreases and cash decreases (use of cash): retained earnings and cash decrease when the dividend is paid (use of cash). Long-term debt increases (source of cash), short-term debt decreases (use of cash): accounts receivables period = (100 + 120) / 2. Operating cycle = 8. 0 + 47. 8 = 55. 8 days. Cash conversion cycle = 8. 0 + 47. 8 23. 5 = 32. 3 days. The operating cycle equals the inventory period plus receivables period. The cash conversion cycle equals inventory period plus receivables period minus trade payables period.