Suppose the following:

Suppose the following:

Beginning Inventory = 11240
Ending Inventory= 12448

Beginning Receivables = 6400
Ending Receivables = 6810

Beginning Payables = 8412
Ending Payables = 8720

Credit Sales = 92356
Cost of Goods Sold = 73417

Calculate the following (round final answers to 2 decimal places):

Operating Cycle = days
Cash Cycle = days

Expert Solution

Days inventory outstanding = (Average inventory/cost of goods sold) * 365
Average inventory = (11240 + 12448)/2 = 11,844.
Cost of goods sold = 73417

Days inventory outstanding = (11,844/73417) * 365 = 58.8836 days

Days sales outstanding = (Averege accounts receivables/credit sales) * 365
Average accounts receivables = (6400+6810)/2 = 6,605
Credit sales = 92,356

Days sales outstanding = (6605/92356) * 365 = 26.1036 days

Days payable outstanding = (Average accounts payable/cost of goods sold) * 365
Average accounts payable = (8412+8720)/2 = 8,566

Days payable outstanding = (8566/73417) * 365 = 42.5867 days

Operating cycle = Days inventory outstanding + Days sales outstanding
= 58.8836 + 26.1036
= 84.9872
Operating cycle = 84.99 days

Cash cycle = Days inventory outstanding + Days sales outstanding - Days payable outstanding
= 58.8836 + 26.1036 - 42.5867
= 42.40 days

Cash cycle = 42.40 days

jeff jeffy answered 2 years ago

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