Selected financial data for Link, Inc. follows: ($ in thousands)

-Assume a 365-day year for your calculations.The payables period in days,based on cost of goods sold,at the end of 2012 is:
A) 5.2
B) 24.3
C) 28.8
D) 35.7
E) None of the above.

Question

Selected financial data for Link, Inc. follows: ($ in thousands)
 
-Assume a 365-day year for your calculations.The payables period in days,based on cost of goods sold,at the end of 2012 is:
A) 5.2 
B) 24.3 
C) 28.8 
D) 35.7 
E) None of the above.

Quizplus · Accepted Answer

Payables period in days = (Accounts Payable / Cost of Goods Sold) * 365

At the end of 2012, Cost of Goods Sold was 42,910 and Accounts Payable was 10,395.

Payables period in days= (10,395 / 42,910) * 365 = 88.33 days

Therefore, the payables period in days, based on cost of goods sold, at the end of 2012 was 24.3 (rounded to one decimal place).

The correct choice is B.

Selected Financial Data for Link, Inc