Suppose that LilyMac Photography has annual sales of $232,000, cost of goods sold of $167,000, average...

Suppose that LilyMac Photography has annual sales of $232,000, cost of goods sold of $167,000, average inventories of $4,700, and average accounts receivable of $25,200. Assume that all of LilyMac’s sales are on credit.

What will be the firm’s operating cycle? (Use 365 days a year. Do not round intermediate calculations and round your final answer to 2 decimal places.)

Operating Cycle Days ____________

Expert Solution



	Operating Cycle Days = Days sales o inventory + Days sale of Outstanding


	Days sales of inventory = (365 / COGS ) X Average inventory
	Days sales of inventory =	365.00
	Divide By	"/" By
	COGS =	$1,67,000
	Equals to =	0.00219
	X	"X " By
	Average Inventory	$4,700
	Days sales of inventory =	10.27

	Days sales outstanding = 365 / Credit Sales X Average Account receivalbles
	Days sales outstanding =	365.00
	Divide By	"/" By
	COGS =	$2,32,000
	Equals to =	0.00157
	X	"X " By
	Average Account receivable	$25,200
		39.65

	Operating Cycle Days = Days sales o inventory + Days sale of Outstanding
	Operating Cycle Days = 10.27 + 39.65
	Operating Cycle Days = 49.92 Days

	Answer = 49.92 Days

jeff jeffy answered 2 years ago

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