If a firm has a cash cycle of 25 days and an operating cycle of 80 days, what is its payables turnover?
A) 14.6
B) 4.56
C) 6.64
D) 55

Question

Quizplus · Accepted Answer

The payables turnover is calculated by subtracting the cash cycle from the operating cycle. Operating cycle (80 days) - Cash cycle (25 days) = 55 days. However, the question asks for the payables turnover, which is typically expressed in terms of how many times a company pays its suppliers over a period, not in days. The provided options do not directly relate to the typical calculation of payables turnover from the given information, suggesting a misunderstanding in the question's formulation. The correct calculation should involve annual purchases and average accounts payable, which is not possible with the given data. The answer provided as "C) 6.64" seems to be a misinterpretation of the question's intent.

If a Firm Has a Cash Cycle of 25 Days