Macrae Products,a manufacturer of building products,buys raw gypsum on credit on May 16.It processes this gypsum to make dry plaster powder on May 20 and pays cash for the raw gypsum on May 30.On June 7 it sells the dry plaster powder to a chain of hardware stores,and on June 21 receives cash payment for this sale.What is the length of the cash cycle in this case?
A)8 days
B)14 days
C)22 days
D)23 days
E)36 days

Question

Quizplus · Accepted Answer

The cash cycle is the time between when a company pays for its inventory and when it receives cash from selling it. Macrae pays for the gypsum on May 30 and receives payment for the sale on June 21, resulting in a cash cycle of 22 days.

Macrae Products,a Manufacturer of Building Products,buys Raw Gypsum on Credit