John Moffat

Sir, what date is this?

Hello John.. who’s the ACCA Tutor for P5.. ?watched the lecture and thought it was you. Just let me know, please.. thanks.

Dear John,

Please I require some explanation on cash conversion cycle and the calculation of the ratios. I listened to your F9 lectures but I am still struggling to understand these.

Inventory days = 15
Receivable days =10
Payable days = 14

Cash conversion cycle is 11 days.

This is how I interpret this, in 25 days I get cash, however the first 14 days out of the 25 days I have to pay out cash, so I still need to wait 11 days to get cash back? but I really still need to wait the whole 25 days to get back cash regardless of the fact that the first 14 days I pay out cash. Please help as I am really confused!

Also for the ratios, say receivables days 24,000/50,000 (Receivables/Sales)This just tells me that receivables is 48% of total sales. when I multiply it by 365 days then what does that mean? I don’t see how it means it takes 175.2 days to collect sales. Rather, I interpret this as receivables are outstanding for 175.2 days out of the whole year.

Please help explain from different angles, I’m sure I will get it once you explain vividly to me John M.

Thank you for your assistance.

I assume you mean that you can’t access them.
The lectures are working fine – the problem must be at your end.
Look at the technical support page. You should find a solution to your problem there.

Why have you posted this on both P4 and F5 pages? I hardly think that you are studying for both of these exams at the same time!