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    Cycle Conversion Cash Period Conversion Inv. Period Collection Rec. Period Deferral Pay

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    GA Zin
    The document contains calculations related to accounting concepts such as accounts receivable, inventory conversion period, payables deferral period, and cash conversion cycle. It also includes a cash budget showing monthly sales, cash receipts, purchases, expenses, and ending cash gain/loss. Key figures calculated include a cash conversion cycle of 40 days, inventory turnover of 5.84, and monthly cash gain of P776.

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    Cycle Conversion Cash Period Conversion Inv. Period Collection Rec. Period Deferral Pay

    Uploaded by

    GA Zin
    29 views3 pages
    The document contains calculations related to accounting concepts such as accounts receivable, inventory conversion period, payables deferral period, and cash conversion cycle. It also includes a cash budget showing monthly sales, cash receipts, purchases, expenses, and ending cash gain/loss. Key figures calculated include a cash conversion cycle of 40 days, inventory turnover of 5.84, and monthly cash gain of P776.

    Original Description:

    Original Title

    Management of CA 1

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    The document contains calculations related to accounting concepts such as accounts receivable, inventory conversion period, payables deferral period, and cash conversion cycle. It also includes a cash budget showing monthly sales, cash receipts, purchases, expenses, and ending cash gain/loss. Key figures calculated include a cash conversion cycle of 40 days, inventory turnover of 5.84, and monthly cash gain of P776.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    29 views3 pages

    Cycle Conversion Cash Period Conversion Inv. Period Collection Rec. Period Deferral Pay

    Uploaded by

    GA Zin
    The document contains calculations related to accounting concepts such as accounts receivable, inventory conversion period, payables deferral period, and cash conversion cycle. It also includes a cash budget showing monthly sales, cash receipts, purchases, expenses, and ending cash gain/loss. Key figures calculated include a cash conversion cycle of 40 days, inventory turnover of 5.84, and monthly cash gain of P776.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 3

    1.

    ) ANSWER: P194,444

    Accounts receivable = DSO × Sales per day


    = 35(P2,027,773/365)
    = P194,444

    2.) ANSWER: 60.83 days

    Inventory conversion period =Inventory/(Sales/365)


    =P5,000,000/ (30,000,000/365)
    = P5,000,000/82,191.78
    = 60.83 days.

    3.) ANSWER: 35.46 days


    Payables deferral period =Payables/ (Cost of goods sold/365)
    =850,000/ (8,750,000/365)
    =P850,000/23,972.60
    = 35.46 days

    Facts given: Payables deferral period =


    30 days; Inv = $5,000,000; Rec. =
    $2,000,000; ADS = $100,000.
    cycle
    conversion Cash
    =
    period
    conversion Inv.
    +
    period
    collection Rec.
    –
    period
    deferral Pay.
    .
    Step 1: Determine the inventory conversion
    period:
    Inventory conversion period =
    Inventory/Daily sales
    = $5,000,000/$100,000
    = 50 days.
    Step 2: Determine the receivables collection
    period:
    Receivables collection period =
    Receivables/Daily sales
    = $2,000,000/$100,000
    = 20 days.
    Step 3: Given data and information
    calculated above, determine the firm’s
    cash conversion cycle:
    Cash conversion cycle = 50 + 20 - 30
    = 40 days.
    4.) ANSWER: 40 days

    CASH CONVERSION CYCLE = Inventory Conversion Period + Rec. Collection Period – Pay deferral period

    Inventory Conversion Period = Inventory/Daily Sales


    = P5,000,000/P100,000
    = 50 days

    Receivable collection Period = Receivables / Daily sales


    = P2,000,000/P100,000
    = 20 days

    Cash conversion cycle = 50 + 20 – 30


    = 40 days

    5.) ANSWER: 87 days

    CASH CONVERSION CYCLE = Inventory Conversion Period + Rec. Collection Period – Pay deferral period
    = 72 + 60 – 45
    = 87 days

    6.) ANSWER: 5.84

    DSO = Receivables / (Sales/365)


    50 = P100,000,000 / sales/365
    P100,000,000 = 50 (sales) / 365
    P36,500,000,000 = 50 (sales)
    P730,000,000 = Sales

    Inventory turnover = Sales / Inv


    = P730,000,000 / P125,000,000
    = 5.84

    7.) ANSWER: P776

    Monthly sales = (3,000 * 40% * 0.98) + (3,000 * %60)


    = 2,976

    Purchases = 1,500
    Other payments = 700

    Cash gain = 2,976 – (1,500 + 700)


    = 776

    CASH BUDGET

    Month 1 Month 2 Month 3


    Sales 3,000 3,000 3,000
    Cash sales (40% with 2% discount) 1,176 1,176 1,176
    Collection (1 month lag) 1,800 1,800
    TOTAL CASH RECEIPTS P1,176 P2,976 P2,976

    Purchases 1500 1500 1500


    Wages, Rent and Taxes 700 700 700
    TOTAL CASH DISBURSEMENTS 2,200 2,200 2,200
    ENDING CASH GAIN /(LOSS) P776 P776

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