Drefus has an inventory turnover of 15 and a trade receivables turnover of 9.The trade payables period is 51 days.What is the length of the cash cycle?

Question

Quizplus · Accepted Answer

The cash cycle is calculated as the sum of the inventory period and the receivables period minus the payables period. Inventory turnover of 15 means inventory is turned over every 365/15 = 24.33 days. Receivables turnover of 9 means receivables are collected every 365/9 = 40.56 days. The payables period is given as 51 days. Thus, the cash cycle = 24.33 days + 40.56 days - 51 days = 13.89 days.

Drefus Has an Inventory Turnover of 15 and a Trade