Dexter and Francis Merchants (DFM) sell their inventory in 94 days on average. Their average customer charges purchase on a credit card whereby payment is received in 6 days. On the other hand, DFM takes 47 days on average to pay for their purchases. Given this information, what is the length of DFM's operating cycle?

Question

Quizplus · Accepted Answer

The operating cycle is the sum of the inventory period and the accounts receivable period. DFM sells their inventory in 94 days and receives payment in 6 days, so the operating cycle is 94 + 6 = 100 days.

Dexter and Francis Merchants (DFM) Sell Their Inventory in 94