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How do you calculate Sales Revenue and Cost of Sales?

Hi :)

I feel like I'm having one of those moments where my brain just isn't working! I'm doing the Cash Management 2013 Practice Assessment 2, task 7.

Task 7b) Link to image of question: https://flickr.com/photos/[email protected]/15666766747/

Gross Profit: £647,875
Trade Receivables: £450,000
Trade Payables: £316,050
Trade Receivables collection period in days: 90
Inventory holding period in days: 60

I need to find the answers to:
Sales Revenue
Cost of Sales
Inventories level in SFP
Trade payables payment period in days

The answers are as follows:
Sales Revenue 1,825,000
Cost of Sales 1,177,125
Inventories level in SFP 193,500
Trade payables payment period in days 98

Task 7c)

"The cash operating cycle for the company is ..... days"

The answer is 52 days, but how do you reach this?


  • Lisa_CarrollLisa_Carroll Registered Posts: 10
    Nevermind! Solved it! Not sure how to delete discussions though :(
  • lauriemarks89lauriemarks89 Registered Posts: 2
    Hi Lisa, Im stuck on the exact same question, and my brain has also stopped working :(

    Do you mind telling me how you got the figures for;

    Sales Revenue
    Cost of Sales
    Inventories level in SFP
    Trade payables payment period in days

    Im lost! Thanks

  • Saz123Saz123 Registered Posts: 1
    edited December 2015
    Hi, any chance either of you could let me know how you worked it out please? I'm also stuck on this question and it's driving me mad! I realise it was a good few months ago since you posted but it's worth a shot! Thank you :)
  • crispycrispy Trusted Regular SouthamptonRegistered Posts: 456

    Bored at work so thought would have a go to get the old brain moving :)

    Sales Revenue: 450,000/90 * 365 = 1,825,000
    Cost Of Sales: 1,825,000 - 647,875 = 1,177,125
    Inventories: 1,177,125/365 * 60 = 193,500
    Payables Days: 316,050 / 1,177,125 * 365 = 98

    Inventories Days: 60
    Receivables days: 90
    Less: Payables Days: (98)
    Cash Cycle: 52

    Ta Dahh :) If this has helped then I have done my good deed for the day
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