Dallas and More (D&M) sells its inventory in 82 days on average. Its average customer charges his purchase on a credit card whereby payment is received in ten days. On the other hand, D&M takes
56 days on average to pay for its purchases. Given this information, what is the length of D&M's
Operating cycle?

Question

Quizplus · Accepted Answer

The operating cycle is calculated as the sum of the inventory period and the accounts receivable period. Here, it is 82 days (inventory period) + 10 days (accounts receivable period) = 92 days.

Dallas and More (D&M) Sells Its Inventory in 82 Days