Operating cycle: Stamp, Inc., has an operating cycle of 81 days and takes 47 days to collect on its receivables. What is its level of inventory if the firm's cost of goods sold is $312,455? Round to the nearest dollar.

Question

Quizplus · Accepted Answer

Operating cycle = Days inventory held + Days receivables outstanding
81 = Days inventory held + 47
Days inventory held = 34
Inventory = (Cost of goods sold ÷ 365) x Days inventory held
Inventory = ($312,455 ÷ 365) x 34
Inventory = $29,105 (rounded to the nearest dollar)

Operating Cycle: Stamp, Inc