Working Capital

Question 1

Raw materials stock period

Answer 1

Inventory
———– x 365
Purchases

Question 2

W-I-P stock and finished goods stock period

Answer 2

Inventory
———– x 365
COGS

Question 3

Cash operating cycle

Answer 3

Inventory conversion period
+ receivables collection period
- payables period

Round up to nearest whole day

Question 4

Inventory conversion period

Answer 4

((WIP+FG)/2)
—————- x365
COGS

Question 5

Working capital

Answer 5

Current assets - current liabilities