3

(Example 4-7) Subways constructing a five-year plan. The firm's ACP is currently 90 days, while its inventory turnover ratio is 3x based on COGS. The company has forecast aggressiverevenue growth along with efficiencyimprovements in manufacturing and credit and collections as follows: 3 (Year 0 is the current year.) Year 5- $ 50,000 $ 60,000 $ 70,000 $ 80,000 $90,000 +' $ 100,000 fI Revenue Cost Ratio ACP (days) Inventory Turnover? 58960 700 55%. 40+ 60%. 57% 60 56960 50 59% 90 80P 54 60 For each planned year: + a. Calculate the COGS. b. Calculate the A/R balance at year-end+ c. Calculate the inventory balance at year-end. a- 1 Cost of Goods Sold- | bAccounts Receivabl C Inventory