Cotton St.has an average collection period of 49 days, an inventory conversion period of 83 days and a payables deferrable period of 36 days.What is Cotton's operating cycle?
A)96 days
B)70 days
C)85 days
D)132 days

Question

Quizplus · Accepted Answer

The operating cycle is calculated as inventory conversion period + average collection period. 
So, operating cycle = 83 days + 49 days = 132 days. 
Since payables deferrable period is not included in the operating cycle calculation, it is not relevant to the answer.

Cotton StHas an Average Collection Period of 49 Days, an Inventory