Bradley's has an inventory turnover rate of 7.6, a payables turnover rate of 11.4, and a receivables turnover rate of 12.6. How long is the operating cycle?

Question

Quizplus · Accepted Answer

The operating cycle is calculated by adding the days inventory outstanding (DIO) and the days sales outstanding (DSO). DIO is 365 divided by the inventory turnover rate, and DSO is 365 divided by the receivables turnover rate. DIO = 365 / 7.6 = 48.03 days, and DSO = 365 / 12.6 = 28.97 days. Adding these together gives 48.03 + 28.97 = 76.99 days.

Bradley's Has an Inventory Turnover Rate of 7