Operating cycle: Le Baron Company, a men's designer firm, 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 to the nearest dollar.

Question

Quizplus · Accepted Answer

Operating cycle = Days' sales in inventory + Days' sales outstanding
123 days = 73 days + Days' sales outstanding
Days' sales outstanding = 50 days

Receivables = (Credit sales / Number of days in a year) x Days' sales outstanding
Receivables = ($433,450 / 365) x 50
Receivables = $59,376.71
Rounding to the nearest dollar, the answer is $59,377. The best choice is A.

Operating Cycle: Le Baron Company, a Men's Designer Firm, Has