ACCA FM · Guided practice (Show me how)
Chapter 3: Management of working capital (1)
The cash operating cycle: each element on its own base
The table below gives information extracted from the annual financial statements of Management plc for the past year.
| Management plc - extracts from annual accounts | $ |
|---|---|
| Inventories: raw materials | 108,000 |
| Inventories: work in progress | 75,600 |
| Inventories: finished goods | 86,400 |
| Purchases of raw materials | 518,400 |
| Cost of production | 675,000 |
| Cost of goods sold | 756,000 |
| Sales | 864,000 |
| Receivables | 172,800 |
| Payables | 86,400 |
Calculate the length of the working capital cycle (assuming 365 days in the year). Round each period to the nearest whole day, as the notes do.
Receivables and the three inventory periods
Calculate Management plc's receivables period and raw materials, work in progress and finished goods inventory periods from its annual statements.
Payables days and the net operating cycle
Calculate Management plc's payables period and net cash operating cycle from its annual statements.
Opening this exercise…