The operating cycle for Fiennes Welbart plc for the year ended 31 May 20X7 was 117.3 days.The average inventory turnover period for the year was 92.7 days and the average trades receivables turnover period for the year was 57.6 days.What was the average trade payables turnover period for the year?

Question

Quizplus · Accepted Answer

The average trade payables turnover period can be calculated by subtracting the sum of the average inventory turnover period and the average trade receivables turnover period from the operating cycle. Thus, 117.3 days (operating cycle) - (92.7 days (inventory turnover) + 57.6 days (receivables turnover)) = -33 days. This indicates that the payables turnover period is effectively reducing the operating cycle by 33 days.

The Operating Cycle for Fiennes Welbart Plc for the Year