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Woolmart Stores Inc. provides the following information from its annual report. Assume all revenues are credit sales. The cost of revenues can be used as an approximation of the companys purchases for the year.

Revenues	$469,162
Cost of revenues	352,488
Inventories as at 31 January 2022	43,803
Inventories as at 31 January 2021	40,714
Accounts payable as at 31 January 2022	38,000
Accounts payable as at 31 January 2021	40,000
Accounts receivable as at 31 January 2022	6,768
Accounts receivable as at 31 January 2021	5,937

REQUIRED:

Review the financial information provided above and answer the following questions (round to two decimal points):

1. Compute the following financial ratios for 2022:

1. Accounts receivable turnover ratio and the collection interval (also called Days Sales Outstanding)
2. Inventory turnover ratio and the holding interval.
3. Accounts payable turnover ratio and the payment interval.

2. Answer the following questions:

1. Does the firm require short-term financing?
2. Using the information provided, compute the change in operating working capital

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Problem #3

EAC Airlines acquired a Boring 787 in 2012 for $300 million. At the time of recognition of the aircraft as a long-term operating asset, (i.e. on January 1, 2012, the company estimated its useful life to be 15 years with an expected scrap value of $50 million at the end of its useful life.

The company uses straight-line depreciation method for the aircraft.

Regulatory changes introduced in January 1, 2020 prohibit the company from flying this aircraft after the end of 2022. Therefore, management is forced to sell it and acquire an upgrade aircraft by end of 2022. In 2020 (as of January 1, 2020), it revised the useful life of the aircraft down to 10 years and increased its salvage value to $90 million. Note that the aircraft was depreciated under the original useful life and scrap value through the end of 2019.

REQUIRED:

1. Indicate the amount of depreciation expense reported on the income statements for the years ended December 31, 2018, 2019 and 2020.
2. Is disclosure of this change in method required? Justify your response.