ACCA · Question 16 · Working Capital Management
Section B - Case 1: Zephyr Co
Zephyr Co is a rapidly growing e-commerce startup specializing in bespoke furniture. Despite surging revenues, the company is experiencing severe cash flow difficulties.
Current financial data:
Revenue: $12,000,000 (all on credit)
Cost of Sales: $8,000,000
Trade Receivables: $2,500,000
Trade Payables: $1,200,000
Inventory: $1,500,000
Assume a 365-day year.
Zephyr Co is considering introducing an early settlement discount of 2% for payment within 10 days. They currently allow 60 days for payment, though customers take longer on average.
What is Zephyr Co's current receivables collection period (in days)?
Answer options:
60 days
76 days
114 days
45 days
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