The Xenopeltis Company estimates its requirement, which is 39,000 units semiannually at a price of P4 per unit. The carrying cost at 15% of the price and its ordering cost at P90 per order. On a 360-day basis, determine the following: 

1. Dahlia Enterprise's DSO is 50 days (on a 365-day basis). On the balance sheet, accounts receivable total P100 million, and inventory totals P125 million. What is the inventory turnover ratio? *

2. Calla Lily Corp. purchases on terms of 2/8, net 45 days, does not accept discounts, and pays after 58 days. How much does the non-free trade credit cost in terms of effective annual percentage cost? (Incorporate a 365-day year.) *

3. Credit terms of 4/30, net 90 days have been given to the Orchids Incorporated. What is the nominal annual percentage cost of the non-free trade credit if it pays within 120 days of purchase? (Assume a calendar year of 365 days.) *

Answer rating: 100% (QA)

1 The inventory turnover ratio is calculated as the cost of goods sold divided by the average inventory Since we are not given the cost of goods sold ... View the full answer