Welcome to this article aimed at helping you with 6 corrected exercises on the operating cycle and the BFR from the Operational Management subject of the BTS MCO.
If you would like to first review the course on the same theme, I invite you to read my article entitled Operating cycle: 7 questions to understand everything.
The 6 corrected exercises on the operating cycle and the WCR on this page mainly concern the working capital requirement, the operating working capital requirement and the non-operating working capital requirement.
You will also find corrected exercises on the following concepts: incoming flows, outgoing flows, monetary flows, investment flows, and the Jobs Resources qualification.
Here is the list of the 6 corrected exercises:
Corrected exercise No. 1: Balis case
Corrected exercise No. 2: Bilo case
Corrected exercise No. 3: Brio case
Corrected exercise No. 4: Rambo case
Corrected exercise No. 5: Rame case
Corrected exercise No. 6: Balo case
You will also find other exercises on the operating cycle and the BFR by reading this article entitled Operating Cycle & WCR: 5 Corrected Exercises.
Corrected exercise No. 1: Balis case
The Balis business unit manufactures and sells reams of paper for stationery professionals.
In order to study the management of the company, you are responsible for examining its operating and non-operating working capital requirements.
To answer the question, we give you the distribution of accounting positions in the following appendix table:
Work to do
- Using the attached table, calculate the working capital requirement, highlighting operating and non-operating.
- Comment
Proposed correction
1/ Using the attached table, calculate the working capital requirement, highlighting operating and non-operating items.
Working capital requirement (WCR) = Inventories of goods + Operating receivables – Trade payables
BFRE = 300 + 1 – 200
BFRE = – €2
Non-operating working capital requirement (BFRHE) = Miscellaneous inventories + Miscellaneous receivables – (Tax and social security debts + Miscellaneous debts)
BFRHE = 150 + 400 – (200 + 50)
BFRHE = €300
2/ Comment
We can conclude that the total working capital requirement is equal to: BFRE + BFRHE or – 2 + 800 = -300 €
The working capital requirement is less than 0, which means that the Balis company correctly manages its collection and disbursement periods with regard to its customers and suppliers.
Corrected exercise No. 2: Bilo case
States
The Bilo business unit manufactures and distributes pairs of socks to very small businesses and SMEs.
This company has been around for eight years now and its turnover continues to grow steadily.
However, to date, she has never studied her exploitation closely.
They would therefore like to know whether their day-to-day business operations are being properly managed in terms of deadlines.
Annexe 1 : Business operations table (2 parts).
Annexe 1 : Accounting elements
(1): tax and social security debts are considered to be part of non-operating activities.
Work to do
- Describe, by completing the table in Appendix 1, the commercial operations of the Bilo company.
- Using Appendix 2, determine the operating working capital requirement and the non-operating working capital requirement – Deduce the working capital requirement.
- Comment on the result of question 2.
Proposed correction
- Describe, by completing the table in Appendix 1, the commercial operations of the Bilo company.
2. Using Appendix 2, determine the operating working capital requirement and the non-operating working capital requirement – Deduce the working capital requirement.
BFRHE = Miscellaneous stock + 0 – (Miscellaneous debts + Tax and social security debts)
BFRHE = 90 + 0 – (80 + 240) = – €230
BFRE = Stock of goods + Customer receivables – Supplier payables
BFRE = 500 + 1 – 000 = – €3
BFR = BFRHE + BFRE
BFR = – 230 – 2 100
BFR = – €2
The working capital resource (WCR) therefore amounts to 2 euros.
3. Comment on the result of question 2.
The working capital requirement of the Bilo company is negative.
This means that the first part of the formula (“Stock + receivables”) is less than the second part.
Which also means that the amount of stock and/or receivables is less than the “Debts” part.
Bilo therefore recovers its receivables and/or quickly sells off its stock.
This means that it negotiates its collection and disbursement deadlines efficiently and intelligently with regard to its suppliers and customers.
Corrected exercise No. 3: Case Brio
States
The Brio business unit specializes in the distribution of ink pens. The CU manager wants to analyze different operations.
Annexe 1 : Table of operations
Work to do
- Complete the table in Appendix 1, specifying the use and resource for each operation.
Proposed correction
Corrected exercise No. 4: Rambo case
States
The Rambo company specializes in the distribution of spare parts for large household appliances to major distributors.
The manager, Mr. Bole, sends you some accounting elements in order to carry out a short study on the operation of the company.
Annexe 1 : Accounting elements
Work to do
- Determine the working capital requirement.
Proposed correction
BFR = Stocks + Receivables – Debts
BFR = 1 + 500 – 7
WCR = €6
The working capital requirement is greater than 0, which means that the Rambo company is not properly managing its collection and disbursement periods with regard to its customers and suppliers.
Corrected exercise No. 5: Rame case
States
The Rame business unit specializes in the distribution of dairy products to businesses.
The manager, Mrs. Mêlle, gives you the table of operations carried out in March N.
Annexe 1 : March Operations Table N
Work to do
- Complete the table in Appendix 1.
Proposed correction
Exercise No. 6: Balo Case
States
You are responsible for studying the components of the operating cycle of the Balo company.
Mrs. Nier, your manager, would like to determine different time frames for her operating cycle.
You have the following information to respond to his request:
- Sales of goods are collected within 30 days.
- Purchases, paid on credit, of these same goods take place 30 days in advance.
- The company pays its suppliers 10 days after a sale.
Work to do
- Calculate the storage life of the goods.
- Determine the duration of the supplier credit.
- How long is the operating cycle?
- Does the company produce a BFR or an RFR? Justify your answer.
Proposed correction
1/ Purchases are settled 30 days before sales. The purchased goods are therefore stored for one month. The storage period is therefore one month.
2/ The duration of supplier credit is 40 days, i.e. 30 days of storage period plus 10 days between the sale and actual payment to suppliers.
3/ The duration of the operating cycle corresponds to the total duration in days between the purchase of the goods and the payment of these to the suppliers. In our exercise, this is a total duration of 40 days.
4/ The company collects its sales within 30 days. Purchases are paid within 40 days. The company therefore achieves an RFR, i.e. an operating financing resource.
Cash receipts take place before disbursements: this is therefore a negative WCR or a financing resource.
The duration of the operating financing resource is 40 days minus 30 days, or 10 days.
Top site, really great, well explained, I learn more in 2 days on this site than in 2 years of management courses!!
I recommend
Thank you very much Mebarki,
SHIT if you are concerned!
Magnificent
Thank you very much.
Yes, it is well explained but we do more complicated exercises than that!
Hello Audurier,
Thank you for reading my articles. Regarding the difficulty of the exercises, it is all to your credit!
Good continuation.
Thank you very much, I understood a lot of things, thanks to your site.
Thanks again.
I always need these kinds of lessons.
Hello,
Thank you for this comment.
Good luck to you.
For financial year 1, are tax and social security debts not part of operating debts?
Hello Ségnane,
It all depends on what is said in the exercise. In this one we consider that these are non-operating debts.
In the operating WCR, the operating debts by default are supplier debts. The others are therefore by default non-operating, unless otherwise specified in the statement.
Good luck to you.