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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 30 · 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:
Which of the following is a fundamental limitation of using the calculated ratios to assess OmniCart's performance?
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:
Which of the following is a fundamental limitation of using the calculated ratios to assess OmniCart's performance?
Answer options:
The ratios do not take into account the change in the corporate tax rate.
The year-end balances for inventory, receivables, and payables may not be representative of the average levels held throughout the year due to seasonal e-commerce trading.
Ratio analysis is only useful for manufacturing companies, not retail or e-commerce.
The ratios ignore the impact of depreciation on the cost of sales.
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