Pretty Lady Cosmetic Products, business and finance homework help

Anonymous

Question Description

1.  Pretty Lady Cosmetic Products has an average production process time for forty days. Finished goods are kept on hand for an average of fifteen days before they are sold. Accounts receivable are outstanding an average of thirty-five days, and the firm receives forty days for credit on its purchases from suppliers.

a.  Estimate the average length of the firm’s short-term operating cycle. How often would the cycle turn over in a year?

b.  Assume net sales of $1,200,000 and cost of goods sold of $900,000. Determine the average investment in accounts receivable, inventories, and accounts payable. What would be the net financing need considering only these three accounts?


Tutor Answer

FinAccGuru
School: Carnegie Mellon University

Here is the answer of both questions. Thanks.

Question No 01
(a) Average length of the firm’s short-term operating cycle = (Inventory Processing Period +
Finished Goods Inventory on hands) + Account Receivables Collection Period
= (40+ 15) + 35
= 90 Days
Number of times cycle turn over in a year = (3...

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Anonymous
Return customer, been using sp for a good two years now.

Anonymous
Thanks as always for the good work!

Anonymous
Excellent job

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