The following data are available for the current year for C Company. The company uses 365 days a year when calculating rates. Annual credit sales = $18 million Cost of goods sold = $12 million Inventory = $3 million Accounts receivable = $3.6 million Accounts payable outstanding = $2 million What is the operating cycle of C Company? a. 176 days b. 152 days c. 164 days d. 138 days e. 145 days
Added by Juan Luis W.
Step 1
The operating cycle is the average number of days it takes for a company to convert its inventory into cash through sales. It can be calculated using the following formula: Operating cycle = Inventory conversion period + Accounts receivable collection period Show more…
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