Question

A firm has the following details: • Raw

Q: Answer-A firm has the following details: • Raw material holding: 25 days • WIP: 15 days • Finished goods: 2...

Gross Operating Cycle RM WIP FG Receivables 25 15 20 30 90 days Less Payables 40 10 50 days Net Operating Cycle 90 50 40 days

material holding: 25 days • WIP: 15 days • Finished goods: 20 days • Receivables: 30 days • Payables: 40 days • Creditors for wages & overheads: 10 days Calculate the net operating cycle (in days), and interpret the working capital implication.

A 50 days → Moderate working capital need

B 40 days → Low working capital need

C 60 days → High working capital need

D 70 days → Excessive working capital blockage

Practice Next

More Accounts Questions

Select the letter-pair that can replace the question mark (?) in the following series?

FK, HM, LQ, RW, ZE, ?
Which letter-cluster will replace the question mark (?) in the following series?
RGV, UME, ?, AYW, DEF
Select the number from among the given options that can replace the question mark (?) in the following series.

17, 18, 22, 31, 47, ___
Which letter-cluster will replace the question mark (?) in the following series?
NPQR, OORQ, PNSP, ____, RLUN
Select the number that can replace the question mark (?) in the following series.

24, 28, 37, 53, 78, ?
Which letter and number cluster will replace the question mark (?) to complete the given series?

LT6, KU12, IW24, FZ48, ____
A series is given with one term missing. Choose the correct alternatives from the given ones that will complete the series.

57, 59, 56, 61, 54, ___

A firm has the following details: • Raw

Solution