Help Cash management practise paper 2 question 7!


Please help I'm stuck

I've been given these figures:

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

And 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

But I have no idea what I need to do to get to these answers.

How am I meant to work out the cost of sales without the closing and opening inventory and the purchases figures?

Am I missing something very obvious!?

Help would be much appreciated :)


  • ellie72
    ellie72 Registered Posts: 12 Regular contributor ⭐ ? ⭐

    You have to work it out backwards.

    To get the sales Figure you have:

    receivables/sales x 365 =90

    To find the Sales figure
    Sales ?= 365/90 x 450,000 (receivables)= 1825000

    COS = Sales-Gross Profit
    COS= 1825000-647875= 1177125

    Inventory/1177125 (COS) x365 =60

    To find the Inventory level figure

    ?inv= 60/365 x1177125 = 193500

    Now you have all the figures you can work out the trade payables period in days
    Payables/COS x365
    316050/1177125 x365 =98 days

    Part C

    cash Operating Cycle
    90+60-98= 52

    How did you get on with the average trend as 36 on Task 2, I worked all the figures out the same but got 30 as the average I must be missing something
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