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ACC 110 Study Guide - Operating Cash Flow, Cash Flow Statement, Cash Cash

104 views19 pages
erinmosquito696
14 Apr 2011
School
Ryerson University
Department
Accounting
Course
ACC 110
Professor
Else Grech

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Document Summary

Cash flow, profitability, and the cash flow statement. E5-1: payables deferral period (goods received - suppliers paid) 45 days: inventory self-financing period (supplier paid - cash collected) Average time fabric held in inventory (5 x 30) Less: payables deferral period (from part a: inventory conversion period (goods received inventory sold): 185 days: receivables conversion period (inventory sold cash collected) 15 days: number of days between receiving inventory from suppliers and receiving cash from customers: The only difference between the two scenarios is the accrual net income, which is a result of differing amounts of depreciation expense. 1 www. notesolution. com all other revenues and expenses in both scenarios were in cash, cash from operations is the same under both scenarios. Decrease under ifrs dividend payments can also be classified as operating. Decrease due to the long maturity period this would be considered an. No cash is involved in this transaction (land exchanged for a mortgage.

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Related Questions

1. Houston Corporation has an inventory conversion period of 60days (DII), a receivables collection period of 36 days (DSO), and apayable deferral period of 24 days (DPO). a. What is the length ofthe company’s cash conversion cycle? b. If Houston’s annual salesare $3,960,000 and all sales are on credit, what is the averagebalance in accounts receivable? c. How many times per year doesHouston turn over its inventory? (week 5) d. What would happen toHouston’s cash conversion cycle if, on average, inventories couldbe turned over eight times a year? 2. Webber Corporation carries anamount of receivables equal to $80,000, and its annual credit salesequal $2.4 million. What is the receivables collection period(DSO)? 3. Cleary Enterprises owes its suppliers $180,000. Thecompany’s cost of goods sold averages $2.52 million. What isCleary’s payables deferral period (DPO)? 4. Willowman FurnitureCompany has inventory that equals $48 million. If the inventoryturnover for the company is 8, what is the inventory conversionperiod and cost of goods sold?

A firm has days' sales in inventory of 105 days, an average collection period of 35 days, and takes 42 days, on average, to pay its accounts payable. Taken together, what do these three figures imply about the firm's operations and its cash flows? 

When does the cost of inventory become an​ expense?

a. When payment is made to the supplier

b. When inventory is purchased from the supplier

c. When cash is collected from the customer

d. When inventory is delivered to a customer