Salem Inc.has an inventory turnover of 15 and an accounts receivable turnover of 9.The accounts payable period is 51 days.What is the length of the cash cycle?

Question

Quizplus · Accepted Answer

The cash cycle is calculated as the inventory period plus the receivables period minus the payables period. Inventory period = 365/15 = 24.33 days, Receivables period = 365/9 = 40.56 days. Cash cycle = 24.33 + 40.56 - 51 = 13.89 days.

Salem IncHas an Inventory Turnover of 15 and an Accounts Receivable