ABC reported the following in its latest financial statements. Credit sales were $800.000 and cost of...

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ABC reported the following in its latest financial statements. Credit sales were $800.000 and cost of goods sold was $60,000. Accounts receivable Accounts payable Inventory Assume 365 days in a year, (a) Calculate the operating cycle. Beginning (S) 8,000 3,000 4,000 Ending (S) 9.000 4.000 5.000 (10 marks) (c) Suppose the firm decides to get credit from its supplier to extend the cash cycle. The supplier quotes 2/8 net 30. What is the interest rate the company has to pay if it takes the trade credit? (10 marks) ABC reported the following in its latest financial statements. Credit sales were $800.000 and cost of goods sold was $60,000. Accounts receivable Accounts payable Inventory Assume 365 days in a year, (a) Calculate the operating cycle. Beginning (S) 8,000 3,000 4,000 Ending (S) 9.000 4.000 5.000 (10 marks) (c) Suppose the firm decides to get credit from its supplier to extend the cash cycle. The supplier quotes 2/8 net 30. What is the interest rate the company has to pay if it takes the trade credit? (10 marks)

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To calculate the operating cycle we need to determine the number of days it takes for a company to c... View the full answer