Peterson's Antiquities currently has a 32.6-day cash cycle. Assume the company changes its operations such that it decreases its receivables period by 3.1 days, increases its inventory period by 1.8 days, and increases its payables period by 2.2 days. What will the length of the cash cycle be after these changes?

Question

Quizplus · Accepted Answer

The cash cycle is calculated as the receivables period plus the inventory period minus the payables period. The changes result in a net decrease of 3.5 days (3.1 - 1.8 - 2.2), so the new cash cycle is 32.6 - 3.5 = 29.1 days.

Peterson's Antiquities Currently Has a 32