Le Baron Company has an operating cycle of 123 days. The firm's days' sales in inventory is 73 days. How much does the firm have in receivables if it has credit sales of $433,450? Round your final answer to the nearest dollar.
A) $59,377
B) $71,252
C) $47,501
D) $64,233

Question

Quizplus · Accepted Answer

The operating cycle is the sum of days' sales in inventory and days' sales outstanding (receivables period). Thus, days' sales outstanding = 123 - 73 = 50 days. Receivables = (Credit Sales / 365) * Days' Sales Outstanding = ($433,450 / 365) * 50 = $59,377.

Le Baron Company Has an Operating Cycle of 123 Days