Your firm has a cost of goods sold of $75 thousand dollars, an average inventory of...

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Your firm has a cost of goods sold of $75 thousand dollars, an average inventory of...

Your firm has a cost of goods sold of $75 thousand dollars, an average inventory of $26 thousand dollars, credit sales of $36 thousand, and average recievables of $13 thousand. What is the length of your firm's operating cycle?

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Answer 1

Answer #1

Inventory period = ( Average Inventory / COGS ) * Days in a year = ( 26000 / 75000 ) * 365	127	Days

Accounts receivables period = ( Average Accounts receivables / Credit Sales ) * Days in a year = ( 13000 / 36000 ) * 365	132	days

Operating cycle = Inventory period + Accounts receivables period = 127 + 132	259	Days

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Answer 2

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