13 week cash flow analysis, cash to suppliers workout. We're now going to calculate the base analysis or roll forwards for both the inventory and accounts payable accounts. These two accounts are going to work together to help us figure out how much cash was actually paid to suppliers. So the first thing we need to do is figure out how much inventory was actually purchased in a year. And again, the data we've been given here is we've been given an ending balance of inventory from our historical ending balance sheet. We've been given some historical insight into previous inventory payable days, which we're ranging between 125 and 150. We have an assumption moving forward that says it's going to get worse before it gets better. And we have our cost of goods sold, which is coming from our forecasted income statement. So the beginning balance in our week one is going to be the ending balance. I'll blow this up a little bit. And let me also freeze these.

And our purchases of inventory we have to solve for. Our ending balance of inventory, we're going to calculate using our cost of goods sold and our inventory days ratio. Our cost of goods sold has been given and it's negative. So I'm going to flip it to make it positive. I'm gonna multiply that by the inventory days ratio and then I'm gonna divide by seven because that's the number of days of cost of goods sold we're dealing with. And that gives me an ending balance for inventory. So it looks like inventory is going down, which means that for it to go down, it means that we had to have sold more inventory than we did purchase or make. So to calculate my purchases of inventory, I take my ending balance and I subtract my beginning balance, which has gone down by the amount of cost of goods sold. So I want to add the cost of goods sold to my beginning balance, and that gives me purchases of 183. And that makes sense because I purchased less than I sold and therefore, my ending inventory goes down. And now with that, I can copy across and I have my inventory balance for the next several weeks. So if we look at what's happening here, inventory days is decreasing. However, the cost of goods sold is staying relatively constant, and that's what's happening with the account. We have this big increase in purchases of inventory in week four, and that's basically showing that we're building up inventory hopefully to support a larger number of sales in the future. Now we're gonna go down to accounts payable. And same thing here, we have an ending balance, which is going to become our beginning balance. And then we have purchases of inventory, which is going to come now from above.

And we also have cash payments to suppliers, which is what we're going to solve for. And we have an ending balance of inventory which is going to come from our payable days assumption here. And we have an assumption going forward saying that it's gonna actually go from what it is currently and it's gonna increase. It looks like perhaps we're expecting in the coming weeks to be able to ease payments to suppliers. So to calculate our ending balance of accounts payable, we're gonna take our cost of goods sold. And again, I'm gonna make that positive by reversing the sign, times the payable days and then divide by seven.

And that gets me an ending balance for accounts payable. And so to solve for cash payments to suppliers, it's going to be the ending balance minus the beginning balance, plus the purchases of inventory, which make the beginning balance go up. And that shows that I've got cash payments to suppliers of zero.

So this is similar to what we saw with TRA case in point, which is that they're forecasting or expecting not to pay suppliers for several weeks. So a question might be, well, if you have on average that you're paying over 16 days, shouldn't you be paying something to your suppliers over 16 days? And that's correct, but we're looking at a week-long period here, which is obviously less than 16 days. So if you keep extending your payable days each week, you can avoid paying your suppliers because this is saying that you'll pay them on average in 34 days. But again, we're still in a week period of time and this whole section is only 28 days. So this is how in the forecast True Religion was able to anticipate not paying suppliers for several weeks based on their expected levels of payables and inventory. And we're seeing that play out in this example here as well.