The cash cycle for 2010 is:
A) 140.27 days.
B) 50.71 days.
C) 95.93 days.
D) 81.65 days.
E) 98.74

Question

Quizplus · Accepted Answer

The cash cycle can be calculated as:
Cash cycle = Days of Inventory + Days of Accounts Receivable - Days of Accounts Payable
Using the information given in the financial statement, we can calculate the cash cycle for 2010 as:
Days of Inventory = (Inventory / Cost of Goods Sold) x 365 = (48,952 / 184,842) x 365 = 96.73 days
Days of Accounts Receivable = (Accounts Receivable / Revenue) x 365 = (31,639 / 315,646) x 365 = 36.68 days
Days of Accounts Payable = (Accounts Payable / Cost of Goods Sold) x 365 = (29,486 / 184,842) x 365 = 59.48 days
Cash cycle = 96.73 + 36.68 - 59.48 = 73.93 days
Therefore, the closest option is C) 95.93 days.

The Cash Cycle for 2010 Is