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RECEIVABLE DAYS

NNavasilas3y ago
Good day Tutor. Kindly help Here's the question below. PIND CO The following information is available for Pind Co, a manufacturing company. You are provided with an extract from the Statement of Profit or Loss: $ Operating profit 42,000 Interest charges (16,000) –––––– Profit before tax 26,000 Taxation (5,460) –––––– Profit after Tax. 20,540 Pind Co has an operating profit margin of 15%. You are provided with an extract from its Statement of Financial Position: $ Equity and reserves Total equity and reserves 420,000 Non-current liabilities Loan 150,000 5% Preference shares. 40,000 Current liabilities Payable. 50,000 If Pind Co has a receivables to cash ratio of 2.25, what is the receivable days to the nearest whole number?
John MoffatJohn MoffatTutor3y ago#1
Why are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers - it has answers and explanations! This is more of a financial accounts question than a Paper PM question, and I don't think that you can have typed out the whole question (or else there is an error in the question) because there is no mention of any non-current assets. Given that the operating profit margin is 15%, the total sales are $42,000/15%. The total assets are the 'missing figure' on the SOFP, and assuming that there are non-current assets then the current assets are the remainder. If we assume that there is no inventory (which would be strange) and therefore only receivables and cash, then the receivables will be 2.25/3.25 times the total current assets. Given that you now will have the receivables and the total revenue, it should be no problem calculating the receivables days (assuming that all sales are on credit). I don't know where you found this question, but assuming that you have copied it correctly it is a very poor question indeed.
NNavasilas3y ago#2
I copied it from the kaplan kit and hence i was confused with the solution, they only said its 26 days but i dont understand how they got that
John MoffatJohn MoffatTutor3y ago#3
Again, if you have copied the question correctly then it would seem that there is information missing. In my previous reply I explained how we would arrive at the receivables days if all the information had been given.
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