The inventory turnover for the Lambkin Company was 8 times and its days in receivables was 55.What is the operating cycle for Lambkin given a 365-day year?

Question

Quizplus · Accepted Answer

The operating cycle is calculated as Days in Inventory + Days in Receivables. Days in Inventory is 365 / Inventory Turnover, which is 365 / 8 = 45.63 days. Adding Days in Receivables (55 days) gives 45.63 + 55 = 100.63 days.

The Inventory Turnover for the Lambkin Company Was 8 Times