Heritage Farms has sales of $1.62 million with costs of goods sold equal to 78 percent of sales.The average inventory is $369,000,accounts payable average $438,000,and receivables average $147,000.How long is the cash cycle?

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The cash cycle is calculated as the inventory period plus the receivables period minus the payables period. First, calculate each period:1. Inventory turnover = Cost of Goods Sold / Average Inventory = (0.78 * 1,620,000) / 369,000 = 3.42 times. The inventory period = 365 / Inventory turnover = 365 / 3.42 = 106.73 days.2. Receivables turnover = Sales / Average Receivables = 1,620,000 / 147,000 = 11.02 times. The receivables period = 365 / Receivables turnover = 365 / 11.02 = 33.12 days.3. Payables turnover = Cost of Goods Sold / Average Payables = (0.78 * 1,620,000) / 438,000 = 2.88 times. The payables period = 365 / Payables turnover = 365 / 2.88 = 126.65 days.Cash cycle = Inventory period + Receivables period - Payables period = 106.73 + 33.12 - 126.65 = 13.20 days. The closest option to this calculation is 13.19 days, so there might be a slight rounding difference in the calculation steps.

Heritage Farms Has Sales of $1