Days working capital is equal to:
A)days payables + days receivables - days inventory.
B)days inventory + days receivables - days payables.
C)days payables + days inventory + days receivables.
D)none of the above

Question

Quizplus · Accepted Answer

The formula for days working capital is days inventory + days receivables - days payables. This is because a high number of days inventory or days receivables will tie up cash, while a high number of days payables allows more time for a company to pay its debts. Subtracting the days payables from the days inventory and days receivables gives the net number of days a company needs to finance its operations.

Days Working Capital Is Equal To