Question: QUESTION 1 Use the information provided below to calculate the cash conversion cycle. INFORMATION The following information was obtained from the records of Cummins Traders

QUESTION 1

Use the information provided below to calculate the cash conversion cycle.

INFORMATION

The following information was obtained from the records of Cummins Traders for 2019:

Sales for the year (all credit) : R 920 000

Credit purchases for the year: R 660 000

Inventories on 31 December 2019 : R 18 000

Accounts receivable on 31 December 2019: R 100 000

Accounts payable on 31 December 2019: R 28 000

Average age of inventories: 9.95 days

QUESTION 2

In order to calculate an entity's weighted average cost of capital (WACC) financial weights have to be set for each component in the firm's capital structure. The weights may be calculated as book or market value, and as historic or target figures.

Explain what is meant by these four types of weights.

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