On average, Furniture & More is able to sell its inventory in 54.2 days and takes 65.3 days on average to pay for its purchases. Its average customer pays with a credit card which allows the company to collect its receivables in 2.9 days. Given this information, what is the length of operating cycle?
A) 57.1 days
B) 88.3 days
C) −8.2 days
D) 116.6 days
E) 122.4 days

Question

Quizplus · Accepted Answer

The length of the operating cycle is calculated by adding the inventory period to the receivables collection period. Here, it's 54.2 days (to sell inventory) + 2.9 days (to collect receivables) = 57.1 days.

On Average, Furniture & More Is Able to Sell Its