Your ﬁrm has an inventory turnover rate of 22, a payables turnover rate of 9, and a receivables turnover rate of 17. How long is your ﬁrm's operating cycle?

Question

Quizplus · Accepted Answer

The operating cycle is calculated as the sum of the days inventory outstanding (DIO) and the days sales outstanding (DSO). DIO = 365 / Inventory Turnover = 365 / 22 = 16.59 days. DSO = 365 / Receivables Turnover = 365 / 17 = 21.47 days. Operating Cycle = DIO + DSO = 16.59 + 21.47 = 38.06 days.

Your ﬁRm Has an Inventory Turnover Rate of 22, a Payables