A firm has an operating cycle of 170 days, an average payment period of 50 days, and an average age of inventory of 145 days. The firm's average collection period is ___________ days.
A) 120
B) 25
C) 75
D) 95

Question

Quizplus · Accepted Answer

The operating cycle is the sum of the average age of inventory and the average collection period. Therefore, the average collection period is 170 days (operating cycle) - 145 days (average age of inventory) = 25 days.

A Firm Has an Operating Cycle of 170 Days, an Average