Tableview Surfing Sports operates in the highly seasonal surfing and surfing board equipment manufacturing industry. Although Tableview
Question:
Tableview Surfing Sports operates in the highly seasonal surfing and surfing board equipment manufacturing industry. Although Tableview Surfing's sales are highly seasonal, to obtain production efficiencies it produces surfing and surfing board equipment evenly throughout the year. Below is summary quarterly financial information for Tableview Surfing Supports.
Tableview Surfing Sports (Rand thousands)
Q1 | Q2 | Q3 | Q4 | |
Sales | 5,000 | 3,000 | 4,000 | 12,000 |
(percent of annual) | 20% | 10% | 10% | 60% |
Cost of Goods Sold | 2,560 | 1,320 | 1,320 | 7,500 |
Accounts Receivable | 1,600 | 750 | 800 | 3,200 |
Inventory | 2,650 | 4,600 | 6,500 | 2,400 |
Accounts Payable | 520 | 520 | 520 | 520 |
a. Calculate Tableview’s collection period, days inventory outstanding, and payables period for each quarter. For simplicity, assume that each quarter has 90 days.
b. Calculate Tableview’s operating cycle and cash conversion cycle for each quarter. How do they vary by quarter, and why? (4 marks)
c. How is this pattern in the cash conversion cycle likely to affect Tableview’s need for funding? (2 marks)
Essentials of Statistics for Business and Economics
ISBN: 978-1305081598
7th edition
Authors: David Anderson, Thomas Williams, Dennis Sweeney, Jeffrey Cam