Interior Designs has an inventory period of 46 days, an accounts payable period of 38 days, and an accounts receivable period of 32 days. Management is considering an offer from their suppliers to pay within 10 days and receive a 2 percent discount. If the new discount is taken, the accounts payable period is expected to decline by 26 days. If the new discount is taken, the operating cycle will be _____ days.

Question

Quizplus · Accepted Answer

Original operating cycle = 46 + 32 = 78 days; The operating cycle will not change as the accounts payable period does not affect the operating cycle, only the cash cycle.

Interior Designs Has an Inventory Period of 46 Days, an Accounts