Webster's currently has an inventory turnover of 15.7, a payables turnover of 9.6, and a receivables turnover of 8.4. How many days are in the cash cycle?

Question

Quizplus · Accepted Answer

The cash cycle is the number of days it takes for a company to convert its inventory into cash. It is calculated as follows:Cash cycle = (Inventory turnover * 365 days) + (Payables turnover * 365 days) - (Receivables turnover * 365 days)In this case, Webster's has an inventory turnover of 15.7, a payables turnover of 9.6, and a receivables turnover of 8.4. Therefore, its cash cycle is:Cash cycle = (15.7 * 365 days) + (9.6 * 365 days) - (8.4 * 365 days) = 28.68 days

Webster's Currently Has an Inventory Turnover of 15