A firm has an average age of inventory of 90 days, an average collection period of 40 days, and an average payment period of 30 days. The firm's operating cycle is ____________days.
A) 130
B) 110
C) 70
D) 120

Question

Quizplus · Accepted Answer

The operating cycle is calculated by adding the average age of inventory (90 days) and the average collection period (40 days), which equals 130 days. The average payment period is not included in the operating cycle calculation.

A Firm Has an Average Age of Inventory of 90