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Bruceton Fanns currently has an operating cycle of 76.3 days. The finn is analyzing some operational...

Bruceton Fanns currently has an operating cycle of 76.3 days. The finn is analyzing some operational changes that are expected to decrease the accounts receivable period by 2.8 days and decrease the inventory period by 3.1 days. The accounts payable turnover rate is expected to increase from seven to eight times per year. If all of these changes are adopted, what will be the firm's new operating cycle?

  1. 8.7 days

B) 61.3 days

C) 54.9 days

D) 70.4 days

E) 76.2 days

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Answer #1

New operating cycle =Old operating cycle-Decrease in accounts receivable-Decrease in inventory period

=76.3-2.8-3.1

=70.4

The answer is D)

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