In 2010, Hagler Company had current assets of $310,000 and current liabilities of $200,000, of which accounts
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In 2010, Hagler Company had current assets of $310,000 and current liabilities of $200,000, of which accounts payable were $130,000. Cost of goods sold was $850,000, merchandise inventory increased by $80,000, and accounts payable were $110,000 in the prior year. In 2011, Hagler had current assets of $420,000 and current liabilities of $320,000, of which accounts payable were $150,000. Cost of goods sold was $950,000, and merchandise inventory decreased by $30,000. Calculate Hagler’s working capital, payables turnover, and days’ payable for 2010 and 2011. Assess Hagler’s liquidity and cash flows in relation to the change in payables turnover from 2010 to 2011.
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive...
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