Question

Calculate the operating cycle based on the following information:

Sales = $91,005
COGS = $33,713
Inventory = $15,464
Accounts Receivable = $23,971

Enter your answer rounded off to two decimal points.

Answer 1

Ans.	Operating Cycle =   Days sales in receivable + Days in inventory
	96.14 + 167.42
	263.56	Days
	*Working Notes:
	1) Calculations of Days sales in receivable :
	Number of days sales in receivable = No. of days in year / Sales * Accounts receivables
	365 / $91,005 * $23,971
	96.14	Days
	1) Calculations of Days in inventory :
	Number of days in inventory = No. of days in year / Cost of goods sold * Inventory
	365 / $33,713 * $15,464
	167.42	Days