Dallas and More (D & M) sells its inventory in 82 days on average. Its average customer charges his purchase on a credit card whereby payment is received in ten days. On the other hand,D & M takes 56 days on average to pay for its purchases. Given this information,what is the length of D & M's operating cycle?
A) 26 days
B) 36 days
C) 66 days
D) 92 days
E) 128 days

Question

Quizplus · Accepted Answer

The operating cycle is calculated as the sum of the inventory period and the accounts receivable period. Here, the inventory period is 82 days and the accounts receivable period is 10 days. Thus, the operating cycle is 82 + 10 = 92 days.

Dallas and More (D & M) Sells Its Inventory in 82