Calculate the length of the occ for the business

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Reference no: EM131438146

Question: The financial statements of Freezeqwik Ltd, a distributor of frozen foods, are set out below for the year ended 31 December last year.

Income statement (profit and loss account)
for the year ended 31 December last year

	£000	£000
Sales revenue		820
Less Cost of sales
Opening inventories	142
Purchases	568
	710
Less Closing inventories	166	544
Gross profit		276
Administration expenses	(120)
Selling and distribution expenses	(95)
Financial expenses	(32)	(247)
Net profit		29
Corporation tax		(⁷)
Net profit after tax		22

Balance sheet as at 31 December last year

Non-current assets Property, plant and equipment	£000	£000	£000
Freehold premises at valuation			180
Fixtures and fittings at written-down value			82
			102
Motor vans at written-down value			102
			364
Current assets
Inventories		166
Trade receivables		264
Cash		24
		454
Less Current liabilities
Trade payables	159
Corporation tax	7	166	288
			652
Equity
Ordinary share capital			300
Preference share capital			200
Retained profit			152
			652

All purchases and sales are on credit. There has been no change in the level of receivables or payables over the period.

Calculate the length of the OCC for the business and go on to suggest how the business may seek to reduce this period.

Reference no: EM131438146

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