Wilson,Inc. has an inventory turnover rate of 15,an accounts payable period of 54 days and an accounts receivable period of 37 days. What is the length of the cash cycle?

Question

Quizplus · Accepted Answer

The cash cycle can be calculated by adding the accounts receivable period to the inventory turnover period and subtracting the accounts payable period.

Cash cycle = (Inventory turnover period + Accounts receivable period) - Accounts payable period 
Cash cycle = (1/15 x 365 days + 37 days) - 54 days 
Cash cycle = (24.33 days + 37 days) - 54 days 
Cash cycle = 7.33 days

Therefore, the answer is E.