ACCA Applied Knowledge · Financial Accounting · Analysis of financial statements
Beno Co has revenue of $900,000, and cost of sales of $600,000. Purchases for the year were $620,000. Closing trade payables are $93,000. What is the payables payment period in days, based on cost of purchases (365-day year, to the nearest day)?
The payables period is 55 days. When purchases are given, they are the correct base: 93,000 / 620,000 x 365 = 54.75 days. Using cost of sales instead would give 57 days, which is wrong.
- A55 days
- B57 daysCorrect
- C38 days
- D42 days
Explanation
Payables days = 93,000 / 620,000 x 365 = 54.75, so about 55 days. Using cost of sales gives 93,000/600,000 x 365 = 56.6, i.e. 57 days, which is not the correct base when purchases are given.
Did you get it right without looking?
One question tells you little. A timed set on Analysis of financial statements shows your real accuracy, how long you take and where you lose marks.
More Analysis of financial statements questions
- Zeta Co has equity of $600,000 (including share capital and reserves) and 8% loan notes of $200,000. There is no preference share capital. U…
- A company's gross profit margin rose from 30% to 35%, but its net profit margin fell from 12% to 9%. Which of the following is the most like…
- Alba Co had credit sales of $2,190,000 for the year. Trade receivables at the year end were $300,000. What is the receivables collection per…
- Ellis Ltd reports profit before interest and tax of $360,000, finance costs of $40,000, and capital employed (equity plus non-current liabil…
- At 31 December, Delta Co had share capital of $500,000, retained earnings of $300,000 and a 6% loan note of $200,000 (non-current). Profit b…
- Zeta Co reported revenue of $800,000, cost of sales of $520,000 and operating expenses of $140,000. What is Zeta Co's operating profit margi…