How is a company's operating cycle determined?
A)Adding the inventory turnover ratio to the receivables turnover ratio divided into 365 days.
B)Adding the average days in inventory to the average days in receivables.
C)Dividing cost of goods sold by average inventory.
D)Dividing 365 days by the difference in the inventory turnover and receivable turnover.

Question

Quizplus · Accepted Answer

Operating cycle = Average number of days to collect receivables + Average number of days to sell inventory

How Is a Company's Operating Cycle Determined