BEC Unit 2 Module 3

Question 1

Quick Ratio

Answer 1

Quick Assets / Current Liabilities

–Excludes inventory and prepaids

Question 2

Net working capital

Answer 2

Difference between current assets and current liab.

Question 3

A/R Turnover

Answer 3

Sales (Net) / Average Accounts Receivables (Net)

Question 4

Inventory Turnover

Answer 4

COGS / Average Inventory

Question 5

Cash Conversion Cycle

Answer 5

Days in Inventory + Days Sales in AR - Days of Payables Outstanding

Question 6

Days in Inventory

Answer 6

Ending Inv. / (COGS/365)

Question 7

Days Sales in AR

Answer 7

Ending AR / (Sales/365)

Question 8

Days of Payables Outstanding

Answer 8

Ending AP / (COGS/365)

• -Takes full advantage of interest free grace period (but don’t be late)
• -Don’t pay too fast unless given incentive 2/10, n30