Transcribed Image Text: Mr. Omar is a Financial Manager of an Omani industrial company located in Muscat that has another three
different branches in the Omani Market. The head company besides other branches are dealing with many
suppliers and many customers on a daily bases; Mr. Omar wants to evaluate the working capital in all
branches for the year 2020 in order to improve the operating performance of the company and make
suitable and needed decisions based on results as well as he will need some calculations with regard to the
cash conversion cycle of each branch and evaluate different elements in the operating cycle so that will
enable him to manage the working capital properly and improve the over whole performance in future.
The Financial statements of the head company in Muscat shows a Net Sales of OMR 3,305,000, Beginning
Inventory of OMR 400,000, Ending Inventory OMR 220,000, Average A/R are OMR 410,000, Average A/P
are OMR 320,000, the costs of goods sold equals to OMR 1,900,000 and Net purchases are 70% of costs
of goods sold.
you are working in the financial department of the company and you have been assigned and two of your
colleagues to assist the financial manager with regard of all needed data and information from other
different departments such as warehouse, production and sales of all branches that are located in Salalah,
Nizwa, Sohar to smooth and accelerate the process of managing the working capital; the following will be
some issues you need to solve so you can provide accurate report to the financial manager:
Question text
The financial manager wants to shorten Sohar branch number of days of payables from 90 days to 75 days
and the average accounts payable is OMR 100,000. What will be the net purchases?
a.
OMR 400,000
b.
OMR 40,000
C.
OMR 405,556
d.
OMR 486,667