Visions designs, markets, and distributes audio and gaming headphones, earbuds, and speakers

Finance Nov 16, 2020

Visions designs, markets, and distributes audio and gaming headphones, earbuds, and speakers. Assume that last year Visions reported cost of goods sold of $150 million. Assume that this year cost of goods sold was $109 million. Accounts payable was $23 million at the end of last year and $17 million at the end of this year.

Required:

1. For this year, compute the average number of days that Visions's accounts payable are outstanding. (Round your answer to the nearest whole number.)

Expert Solution

Computation of the average Number of days accounts payable outstanding:-

Average accounts payable = (Beginning accounts payable + Ending accounts payable) / 2

= ($23 + $17) / 2

= $40 / 2

= $20 million

Average Number of days accounts payable outstanding = 365 * Average accounts payable / Cost of goods sold

= 365 * $20 / $109

= $7,300 / $109

= 66.97 days Or 67 days

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