Question

The annual accounts payable is 4,800; the annual revenue is 75,000, and the gross profit margin is 40%. The payable days estimated from the data above is ______. Review Later 29 46 39

Answer 1

To estimate payable days, calculate the cost of goods sold based on the gross profit margin, find the payables turnover ratio using COGS and accounts payable, and finally divide the number of days in a year by the turnover ratio.

Step-by-step explanation:

To estimate the payable days from the given data, you need to follow a series of steps:

1. First, determine the cost of goods sold (COGS). Since gross profit margin is 40%, this implies that COGS is 60% of the annual revenue.
   COGS = 60% of $75,000 = $45,000.
2. Next, calculate the payables turnover ratio. This is the ratio of COGS to average accounts payable.
   Payables turnover ratio = COGS / annual accounts payable
   Payables turnover ratio = $45,000 / $4,800
3. Now, divide the number of days in a year by the payables turnover ratio to find the payable days.
   Payable days = 365 days / payables turnover ratio

After calculating the payables turnover ratio, you would then use that value to calculate the payable days.

Answer 2

Estimated Payable Days = 39

Step-by-step explanation:

Given:

Annual account Payable = 4,800

Annual revenue = 75,000

Gross profit margin = 40%

Find:

Payable days

Computation:

Annual expense = Annual revenue(1-Gross profit margin)

Annual expense = 75,000(1-0.4)

Annual expense = 45,000

Estimated Payable Days = [4,800 × 365] / 45,000

Estimated Payable Days = 39