Determine whether there has been a slowdown in Brook Plumbing Supplys operating cycle between 20Y2 and 20Y3 and if so, the nature of the slowdown.

• There was virtually no change in Brook Plumbings operating cycle, because its shorter collection period made up for its longer holding period
• Brook Plumbings operating cycle slowed by 8.5 days, due to its collection period lengthening by 4.3 days and its holding period lengthening by 4.2 days.
• Brook Plumbings operating cycle actually shortened by 4.3 days, due entirely to its shorter collection period
• Brook Plumbings operating cycle slowed by 4.2 days, due entirely to its longer holding period

Brook Plumbing Supply Ltd Brook Plumbing Supply Ltd The following case information includes: . Part A Company information Part B Statements of financial position Statements of comprehensive income Monthly sales figures Quick cash flow Part C Ageings of accounts receivable Brook Plumbing Supply Ltd Part A Company Information Brook Plumbing Supply is a wholesale distributor of plumbing products to building contractors and the trades. The company sells nearly all the parts and tools that plumbing companies need; it also sells to retail customers. Brook Plumbing was started and is owned by two brothers, Sam and David Brook, and has been in business for more than 25 years. The brothers have always managed all significant areas of the business without assistance. Brook's main office and warehouse are located in a medium-sized city. The company also has a branch sales office in a nearby community. Freedom purchases plumbing supplies directly from manufacturers' representatives. Since almost all of the products are generic, the Brooks use several different sources. A recent trade checking shows them to be discount-to-prompt with all vendors. Brook Plumbing competes with other local building supply and plumbing wholesalers and hardware stores, and several national chain stores. Brook has built a reputation for meeting the special needs of local contractors and the trade- customers who require fast service, credit, and product expertise. Brook's sales representatives will visit building sites with contractors and even help them prepare bids and lay out jobs. Almost all of this work produces sales. This organization has been Brook Plumbing's only financial institution for two years. Brook Plumbing Supply Ltd Statements of Financial Position (in $000s) As At December 31 20Y3 20Y2 2011 $ 154 $ ASSETS Current assets Cash and equivalents Accounts receivable Inventory Other current assets Total current assets 785 1075 40 2.010 770 902 44 97 885 1020 23 2025 1.870 327 Fixed assets Gross fixed assets Less: Accumulated depreciation Net fixed assets 335 117 218 331 100 231 89 238 97 99 95 Other noncurrent assets $ 2.325 2.200 $ TOTAL ASSETS 2.358 $ $ $ LIABILITIES AND EQUITY Current liabilities Accounts payable Accrued expenses Other current liabilities Notes payable Current portion-LTD Total current liabilities 528 143 99 473 136 91 592 62 1.354 551 155 117 490 68 1.381 486 66 1322 Long-term debt 143 209 277 Other noncurrent liabilities 35 33 37 Share capital 100 100 100 Retained earnings 693 536 563 TOTAL LIABILITIES AND EQUITY $ 2.325 $ 2. 200 $ 2.358 Plumbing Supply Ltd Part Brook Plumbing Supply Ltd Statements of Comprehensive Income in $000s) Years Ended December 31: 20Y3 20Y1 $ $ $ Sales Cost of goods sold Gross profit 6,504 4,814 1,690 20Y2 5,801 4,258 1.543 5.120 3.661 1,459 905 General and administrative expense Selling expense Other expense Profit before taxes 417 65 901 387 58 197 915 385 51 108 303 Provision for income taxes 146 95 52 Net income $ 157 $ 102 $ 56 Brook Plumbing Supply Ltd Monthly Sales (in $000s) 20Y3 20Y2 $ $ 398 January February March April May June July August September October November December 405 455 480 496 575 610 615 640 597 543 532 556 405 450 455 520 545 570 590 505 459 439 465 umbing Supply Ltd + (U Cash Flow (in $000s) me Brook Plumbing Supply Lid WI GFA (U 20Y2 20Y3 102 profit 15 20 198 312 s: Depreciation, amortization expense 5 or less) Working investment Equals Cash after operating cyde s or less) 3 Gross long-term assets Equals. Cash after capital investment cycle 4 304 0 304 156) 20 ENDING 170 55 Dividends declared Equals. Cash available for all debt repayment ss: Current portion long-term debt (prior year) Equals Cash available for other debt repayment mange in working investment counts receivable (net) us Inventory ess Accounts payable ess Accrued expenses Equals Working investment Eeginning working investment 1199 Less Ending working investment 1001 Equals a Working investment Change in working investment Accounts receivable (net) Plus Inventory Less Accounts payable Less Accrued expenses Equals. Working investment BEGINNING 885 1020 551 155 1199 902 528 143 1001 20Y2 BEGINNING ENDING 2013 BEGINNING ENDING Beginning working investment Less Ending working investment Equals Working investment Change in working investment Accounts receivable (net) Plus Inventory Less Accounts payable Less Accrued expenses Equals. Working investment Beginning working investment Less Ending working investment Equals. Working investment Are any changes in income taxes payable, interest payable prepaid expenses, investments or miscellaneous other accounts large enough to distort quick cash flow? Brook Plumbing Supply Ltd Part Brook Plumbing Supply Ltd Ageings of Accounts Receivable 20Y3; March 31 June 30 Days from Date of Invoice Total Invoices Outstanding Days from Date of Invoice Total Invoices Outstanding 0-30 31-60 61-90 90+ Total accounts receivable $ 250,000 310,000 130,000 100,100 0-30 31-60 61-90 90+ Total accounts receivable $ 360,000 330.000 70.000 40.000 $ 790,100 $ 800,000 September 30 December 31 Days from Date of Invoice Days from Date of Invoice 0-30 31-60 61-90 90+ Total accounts receivable Total Invoices Outstanding $ 300,000 310,000 125,500 60,000 0-30 31-60 61-90 90+ Total accounts receivable Total Invoices Outstanding $ 345,000 205,000 185.000 50,400 $ 795,500 $ 785.400 Note: Terms are net 60 days