Ahmed textile reported sales of Rs.32 million and it’s cost of goods sold is Rs. 12.8 million in 2020. The balance sheet of the company is furnished below:Ahmed TextileBalance SheetAs of December 31,2020In Rs. ThousandsAssetsLiabilities and EquityCashRs. 1,954Accounts payableRs. 1,300Account receivable4,414Notes payable1,000Inventory1,414Accruals1,220Total current assets7,782Total current liabilities3,520 Long term liabilities3,000 Total liabilities6,520Fixed assets8,500Common equity9,762Total assets16,282Total 16,282*company is operating for 365 days a year. What is the net working capital of Ahmed Textile in 2020? What is Ahmed Textile’s Cash Conversion Cycle in 2020? What is Ahmed Textile’s Operating Cycle in 2020? Assume that the average accounts receivable days for the textile industry is 30 days. What should be the cash conversion cycle of Ahmed Textile if it wants to match its accounts receivable days to industry average of 30 days?

1. Net Working Capital = Current Assets - Current Liabilites Current Assets = 7,782,000 Current…

Answered: Ahmed textile reported sales of Rs.32…

Managerial Accounting: The Cornerstone of Business Decision-Making

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Chapter15: Financial Statement Analysis

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Ahmed textile reported sales of Rs.32 million and it’s cost of goods sold is Rs. 12.8 million in 2020. The balance sheet of the company is furnished below:

Ahmed Textile

Balance Sheet

As of December 31,2020

In Rs. Thousands

Assets	Liabilities and Equity
Cash	Rs. 1,954	Accounts payable	Rs. 1,300
Account receivable	4,414	Notes payable	1,000
Inventory	1,414	Accruals	1,220
Total current assets	7,782	Total current liabilities	3,520
		Long term liabilities	3,000
		Total liabilities	6,520
Fixed assets	8,500	Common equity	9,762
Total assets	16,282	Total	16,282

*company is operating for 365 days a year.

What is the net working capital of Ahmed Textile in 2020?
What is Ahmed Textile’s Cash Conversion Cycle in 2020?

What is Ahmed Textile’s Operating Cycle in 2020?

Assume that the average accounts receivable days for the textile industry is 30 days. What should be the cash conversion cycle of Ahmed Textile if it wants to match its accounts receivable days to industry average of 30 days?

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