Corporate Finance

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Re: Corporate Finance

Postby edupristine » Tue Aug 23, 2016 10:07 am

A) Rightly said, the best way to calculate inventory holding period is to calculate using average inventory. Having said that, the method should be the same for calculation of all items involved in operating cycle including average receivables and average payables. In the absence of opening an closing information for other items, ending values have been used for calculation
B) Closing inventory is added and opening inventory is subtracted to obtain net purchases, which is correct.

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