Illustrate working capital cycle in a manufacturing business, Financial Management

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Working capital cycle in a manufacturing business

Average time raw materials are in stock (raw materials/purchases x 365 days)

 

Plus

 

Time taken to produce goods

 

  • Work in progress days (work in progress / cost of goods sold x 365 days)

 

  • Finished goods days(finished goods / cost of goods sold x 365 days)

 

 

Plus

 

Time taken by customers to pay for goods(receivable days)

 

Less

 

Period of credit taken from suppliers(payable days)

 

Equals

 

Working capital cycle (in days)

 

 


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