Your firm has an inventory turnover rate of 22, a payables turnover rate of 9, and a receivables turnover rate of 17. How long is your firm's operating cycle?

Question

Quizplus · Accepted Answer

The operating cycle is calculated as the sum of the days inventory outstanding (DIO) and the days sales outstanding (DSO). DIO is 365 days divided by the inventory turnover rate, and DSO is 365 days divided by the receivables turnover rate. So, DIO = 365 / 22 = 16.59 days, and DSO = 365 / 17 = 21.47 days. Adding these together gives the operating cycle: 16.59 + 21.47 = 38.06 days.

Your Firm Has an Inventory Turnover Rate of 22, a Payables