The following data applies to the XTC Company:
- Sales = $1,000,000.
- Receivables = $260,000.
- Payables = $600,000.
- Purchases = $800,000.
- COGS = $800,000.
- Inventory = $400,000.
- Net Income = $50,000.
- Total Assets = $800,000.
- Debt/Equity = 200%.
What is the average collection period, the average inventory processing period, and the payables payment period for XTC Company?
|
Average Collection Period |
Average Inventory Processing Period |
Payables Payments Period |
A) |
95 days |
183 days |
274 days | | |
B) |
55 days |
195 days |
231 days | | |
|
Receivables turnover = $1,000,000 / $260,000 = 3.840 Average collection period = 365 / 3.840 = 95.05 or 95 days
Inventory turnover = $800,000 / $400,000 = 2 Average inventory processing period = 365 / 2 = 183 days
Payables turnover ratio = $800,000 / $600,000 = 1.333 Payables payment period = 365 / 1.333 = 273.82 or 274 days
|