Entwhistle Ltd Entwhistle's Credit Terms Are Net 30 Days on Average Entwhistle

question 34

Multiple Choice

Entwhistle Ltd.supplied the following information for the years-ended December 31, 2013 and 2014: $\begin{array}{lcc} \text { Current Assets: } & 2014 & 2013 \\\text { Cash } & \$ 15,000 & 16,750 \\\text { Accounts Receivable } & 247,500 & 299,000 \\\text { Inventory } & 275,000 & 166,250 \\\text { Prepaid expenses } & 4,000 & 4,000 \\\\\text { Current liabilities }&\$541,500&\$1,084,000\\\\\text { Net credit sales } & \$ 2,400,000 & \$ 2,255,000 \\\text { Purchases } & \$ 1,700,000 & \$ 1,590,000\end{array}$ Entwhistle's credit terms are net 30 days On average Entwhistle holds inventory for how many days?

• A)47.4 days
• B)50.6 days
• C)59 days
• D)65 days

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Definitions:

Weighted Average Cost Of Capital

The average rate that a company is expected to pay to all its security holders to finance its assets.

Stock Price

The cost of purchasing a share of a company in the stock market, subject to fluctuations based on supply and demand.

Operating Risk

The risk of loss arising from the day-to-day operations of a business.

Cost Of Capital

A measure of the return required by investors to compensate them for the risk of investing in a company.