Thanks but how can I calculate the purchases if it not given on the financial statement?
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by kamranACA</i>
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Ratio = (Average accounts payable* / purchases during the year) x 365 days
*Average A/C payable = (opening balance of A/C payable + closing balance of A/C payable) / 2
You may find purchases in the note of "Cost of Sales" (or its sub-note) where normally the reconciliation of material consumed is disclosed. If it is not disclosed try the following
Material purchased =
Closing stock of Raw material (normally disclosed as a component of stock-in-trade)
Add
Raw Material Consumed (normally disclosed in cost of sales)
Less
Opening stock of Raw material (normally disclosed as a component of stock-in-trade in comparative figures)
If you don't find purchases by any means, then you can at least take "Cost of Sales" instead of Purchases. Although it's not appropriate but is used in various solutions theoratically.
You may find purchases in the note of "Cost of Sales" (or its sub-note) where normally the reconciliation of material consumed is disclosed. If it is not disclosed try the following
Material purchased =
Closing stock of Raw material (normally disclosed as a component of stock-in-trade)
Add
Raw Material Consumed (normally disclosed in cost of sales)
Less
Opening stock of Raw material (normally disclosed as a component of stock-in-trade in comparative figures)
If you don't find purchases by any means, then you can at least take "Cost of Sales" instead of Purchases. Although it's not appropriate but is used in various solutions theoratically.
