Question

2 question (30%) Seagate LTD has been striving for the last five years to improve its management of working capital. Historical data for the firm's sales, account receivable, inventories, and accounts payable given below. Jan-2014 Jan-2015 an-2016 an-2017 an-2018 Sales-Net £000 2873 3475 5 296 7 759 2 327 1486 1643 eceivable total 411 538 726 903 Accounts payable £000 Inventories 220 283 466 1040 293 129 251 a) Calculate Seagate's DSO, DSI and DPO for each of the five years. Use sales as a proxy of cost of good sold and purchases. What has Seagate accomplished in its attempts to better manage its investments in accounts receivable and inventory? b) Calculate Seagate's cash conversion cycle (CCC) for each of the five years. Evaluate Seagate's overall management of its working capital. 3 question (30%).

Answer 1

Calculate days sales outstanding, Days sales inventory and Days payable outstanding as follows:

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Formulas: