FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
|
The management of Pharmaceutical Manufacturers (PM) understand that for the firm to perform better, it must improve its
Pharmaceutical Manufacturers (PM) |
|||
|
Condensed |
|||
|
Assets |
|
Liabilities & Equities |
|
|
Cash and Cash Equivalents |
$460 |
Accounts Payable |
$550 |
|
Inventory |
450 |
Accrued Expenses |
45 |
|
|
300 |
Bank Borrowings |
750 |
|
Prepaid Expenses |
200 |
Bonds |
600 |
|
Non-Current Assets |
2100 |
Ordinary Share Capital |
1200 |
|
|
|
|
365 |
|
Total Assets |
$ 3510 |
Total Liabilities & Equities |
$3510 |
|
Condensed Balance sheet (amounts in millions) at 31 December 2015 |
|||
|
Assets |
|
Liabilities & Equities |
|
|
Cash and Cash Equivalents |
$500 |
Accounts Payables |
$500 |
|
Inventory |
425 |
Accrued Expenses |
400 |
|
Accounts Receivables |
450 |
Bank Borrowings |
800 |
|
Prepaid Expenses |
350 |
Bonds |
580 |
|
Non-Current Assets |
2300 |
Ordinary Share Capital |
1200 |
|
|
|
Retained Earnings |
545 |
|
Total Assets |
$ 4025 |
Total Liabilities & Equities |
$4025 |
The cost of sales was $900 million and net sales were $1600 million in 2015. There were no cash sales.
TASKS
(a) Calculate the 2015 Operating cycle
(b) Calculate the 2015 Cash (conversion) cycle
(c) Comment on the overall working capital efficiency of the firm.
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