Drefus, Inc. has an inventory turnover of 15 and an accounts receivable turnover of 9. The accounts payable period is 51 days. What is the length of the cash cycle?

Question

Quizplus · Accepted Answer

The cash cycle is the time it takes for a company to convert its inventory into cash. It is calculated as follows:Cash cycle = Inventory turnover + Accounts receivable turnover - Accounts payable periodIn this case, the inventory turnover is 15, the accounts receivable turnover is 9, and the accounts payable period is 51 days. Therefore, the cash cycle is:Cash cycle = 15 + 9 - 51 = 13.89 daysTherefore, the correct answer is A) 13.89 days.