Sereneva has an inventory turnover ratio of 52, an accounts receivable balance of $365,000, average daily credit sales of $36 500, accounts payable of $182 500 and cost of goods sold of $7 993 500.What is Sereneva's operating cycle to the nearest day?
A)17 days
B)61 days
C)27 days
D)-27 days

Question

Quizplus · Accepted Answer

Operating cycle = (Inventory turnover ratio * 365 days) + (Average collection period) - (Average payment period)Average collection period = (Accounts receivable / Average daily credit sales) * 365 days= (365,000 / 36,500) * 365 days= 365 daysAverage payment period = (Accounts payable / Cost of goods sold) * 365 days= (182,500 / 7,993,500) * 365 days= 8 daysOperating cycle = (52 * 365 days) + 365 days - 8 days= 18,980 days= 17 days (to the nearest day)

Sereneva Has an Inventory Turnover Ratio of 52, an Accounts