Calculate the length of dx''s working capital cycle, Financial Econometrics

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DX had the following balances in its trial balance at 30 September 2006:

Trial balance extract at 30 September 2006

$000    $000

Revenue                                 2,400

Cost of sales               1,400

Inventories                 360

Trade receivables      290

Trade payables                      190

Cash and cash equivalents       95

Calculate the length of DX's working capital cycle at 30 September 2006.

Solution:

Inventories days

(Inventories / cost of sales) x 365 days

(360 / 1,400) x 365 days

93.9 days

Trade receivable days 

(Trade receivables / credit sales) x 365 days

(290 / 2,400) x 365 days

44.1 days

Trade payable days

(Trade payables / cost of sales) x 365 days

(190 / 1,400) x 365 days

49.5 days

Working capital cycle

93.9 + 44.1 -49.5

88.5 days

 


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