Cora Operation has an inventory turnover of 121 and a receivables turnover of 36. This means that it takes _____ days for the ﬁrm to sell its inventory and collect payment for that sale.
A) 2.32
B) 4.29
C) 11.86
D) 13.16
E) 14.09

Question

Quizplus · Accepted Answer

Days Inventory Outstanding (DIO) = 365 / Inventory Turnover = 365 / 121 = 3.02 days

Days Sales Outstanding (DSO) = 365 / Receivables Turnover = 365 / 36 = 10.14 days

Days for the firm to sell its inventory and collect payment for that sale (Cash Conversion Cycle) = DIO + DSO = 3.02 + 10.14 = 13.16 days.

Therefore, the answer is D) 13.16.

Cora Operation Has an Inventory Turnover of 121 and a Receivables