Section B - Case 3
*OmniCart is an e-commerce retailer. The following financial data is available for the years ended 31 December:
20X5:
Revenue: $8,000,000
Cost of Sales: $5,000,000
Inventory: $500,000
Trade Receivables: $800,000
Trade Payables: $600,000
20X4:
Revenue: $6,000,000
Cost of Sales: $3,600,000
Inventory: $400,000
Trade Receivables: $500,000
Trade Payables: $450,000
Assume a 365-day year for all calculations.*
Question:
What is OmniCart's inventory turnover period (in days) for the year ended 31 December 20X5?
ACCA · Question 29 · Interpretation of Financial Statements
Section B - Case 3
*OmniCart is an e-commerce retailer. The following financial data is available for the years ended 31 December:
20X5:
Revenue: $8,000,000
Cost of Sales: $5,000,000
Inventory: $500,000
Trade Receivables: $800,000
Trade Payables: $600,000
20X4:
Revenue: $6,000,000
Cost of Sales: $3,600,000
Inventory: $400,000
Trade Receivables: $500,000
Trade Payables: $450,000
Assume a 365-day year for all calculations.*
Question:
Based on the working capital metrics calculated, what is the most significant risk OmniCart is facing in 20X5?
Answer options:
Excessive liquidity, as receivables are growing faster than payables.
Overtrading, as evidenced by rapidly growing revenue coupled with a lengthening cash operating cycle.
Inventory obsolescence, as inventory days have doubled.
Over-reliance on supplier financing.
32 questions · hints · full answers · grading
Expert