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Calculate Cash Conversion Cycle; determine net cash from operating activities

Cash Conversion Cycle. Calculate the accounts receivable period, accounts payable period, inventory period, and cash conversion cycle for the following firm:

Income statement data:

Sales 5,000
Cost of goods sold 4,200
Balance sheet data:
Beginning of Year End of Year
1. Inventory 500 600
2. Accounts receivable 100 120
3. Accounts payable 250 290

Determine the following:

4. If assets are $7,000 and capital is $2,000, what are liabilities?
5. If capital is $17,000 and liabilities are $8,000, what are assets?

Cash Flow Statement

Use the following balance sheet information and other data to determine net cash from operating activities:

December 31, 2000 December 31, 2001
Account Receivable $ 4,000 $ 7,000
Merchandise Inventory 10,000 8,000
Prepaid Insurance 1,000 700
Accounts Payable 12,000 6,000
Rent Payable 9,000 16,000
Dividend Payable 2,000 2,500
Bonds Payable 50,000 40,000

Other Data:
Net Income $25,000
Depreciation Expense 5,000
Amortization of Goodwill 3,000
Amortization of bond premium 900
Gain on sale of plant 4,400
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Solution Summary

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