a) Calculate the total purchases b) Calculate the creditors payment period in days c) Explain how the decision could affect the daily operations of the business.

Step 1: Calculate the total purchases using the given cash purchases and their percentage. Cash purchases represent 30% of total purchases. Let TP be the total purchases. R216\,000 = 0.30 × TP Step 2: Solve for TP. TP = (R216\,000)/(0.30) TP = R720\,000 The total purchases are R720 000. 2.2.2 Calculate the creditors' payment period in days. Step 1: Calculate the credit purchases. Credit purchases are the total purchases minus cash purchases. Credit Purchases = Total Purchases - Cash Purchases Credit Purchases = R720\,000 - R216\,000 Credit Purchases = R504\,000 Step 2: Calculate the average creditors. Average creditors are the sum of opening and closing creditors divided by two. Average Creditors = Opening Creditors + Closing Creditors2 Average Creditors = (R140\,000 + R160\,000)/(2) Average Creditors = (R300\,000)/(2) Average Creditors = R150\,000 Step 3: Calculate the creditors' payment period in days. The formula for creditors' payment period is: Creditors' Payment Period = Average CreditorsCredit Purchases × 365 days Creditors' Payment Period = (R150\,000)/(R504\,000) × 365 days Creditors' Payment Period ≈ 0.297619 × 365 days Creditors' Payment Period ≈ 108.62 days The creditors' payment period is approximately 108.62 days. 2.2.3 Explain how this decision could affect the daily operations of the business. Provide TWO points. • The business may experience stock shortages as it cannot acquire necessary inventory on credit. This could lead to an inability to meet customer demand, resulting in lost sales and customer dissatisfaction. • The business will face significant cash flow strain as it will be forced to make all future purchases in cash. This could deplete cash reserves, making it difficult to pay other operating expenses or even leading to liquidity problems. Send me the next one 📸