Company X, a small company, has an average warehouse period of 120 days, an average collection period
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Company X, a small company, has an average warehouse period of 120 days, an average collection period of 90 days, an average payment period to suppliers of 30 days and a net profit margin on sales of 3%. Sales amounted to 1,000,000 euros, with purchases accounting for 75% of sales.
1. Calculate your Working Capital Requirement (WCR).
2. How much will your NOF amount to if sales grow by 25%? and if they fall by 25%?
3. At what rate will you be able to grow without increasing your external financing?
Expert Answer:
Answer rating: 100% (QA)
Answer 1 Sales 1000000 Cost of Goods Sold 75 of Sales 750000 ... View the full answer
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