Payables Are Entirely Due to Inventory Purchases at Cosmo Inc

question 10

Essay

Payables are entirely due to inventory purchases at Cosmo Inc. COGS is 70% materials, and the company pays its bills in 50 days. This year's revenue is $1,000,000 and is forecast to grow by 15% next year. The cost ratio (COGS as a % of revenue)is planned at 40% next year. Forecast next year's ending payables balance.

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Definitions:

Arithmetic Average Return

The simple mean of a series of returns over a period of time, calculated by summing the returns and dividing by the number of periods.

Multiyear Period

A span of time that covers more than one year, often used in planning, budgeting, or assessing performance over the long term.

Compound Return

The total amount of money gained or lost on an investment over a specified period, calculated by taking into account the effect of compounding.

Volatility

The statistical measure of the dispersion of returns for a given security or market index, often associated with the degree of risk involved.