The following figures are taken from the financial statements of Foods Ltd, a distributor of frozen foods, for the year ended 31 December 2021: £000 Sales revenue 820 Cost of sales 544 Opening inventories 142 Closing inventories 166 Purchases 568 Trade receivables 264 Trade payables 159 All purchases and sales are on credit. There has been no change in the level of trade receivables or payables over the period. Required: a) Calculate the length of the operating cash cycle for the business. b) Suggest how the business may seek to reduce this period. (Provide a maximum of 250 words and six valid reasons)

The following figures are taken from the financial statements of Foods Ltd, a distributor of frozen foods, for the year ended 31 December 2021: £000 Sales revenue 820 Cost of sales 544 Opening inventories 142 Closing inventories 166 Purchases 568 Trade receivables 264 Trade payables 159 All purchases and sales are on credit. There has been no change in the level of trade receivables or payables over the period. Required: a) Calculate the length of the operating cash cycle for the business. b) Suggest how the business may seek to reduce this period. (Provide a maximum of 250 words and six valid reasons)

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 14BEA: Last year, Nikkola Company had net sales of 2.299.500,000 and cost of goods sold of 1,755,000,000....

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