If a firm has a cash cycle of 75 days and an operating cycle of 120 days, what is its payables turnover?
A) 8.11x
B) 7.19x
C) 5.97x
D) 6.73x

Question

Quizplus · Accepted Answer

The payables turnover is calculated by subtracting the cash cycle from the operating cycle to find the payables period, then dividing 365 by the payables period. Here, 120 - 75 = 45 days for the payables period. Thus, 365 / 45 = 8.11x.

If a Firm Has a Cash Cycle of 75 Days