If a firm has a cash cycle of 55 days and an operating cycle of 150 days, what is its payables turnover?
A) 9.50
B) 6.64
C) 3.84
D) 2.60

Question

Quizplus · Accepted Answer

The payables turnover is calculated as the operating cycle minus the cash cycle, which gives the duration of payables. In this case, it's 150 days (operating cycle) - 55 days (cash cycle) = 95 days. The payables turnover in days is then 365 days divided by 95 days, which equals approximately 3.84.

If a Firm Has a Cash Cycle of 55 Days