A firm has an operating cycle of 170 days, an average payment period of 50 days, and an average age of inventory of 145 days. The firm's average collection period is ________ days.
A) 25
B) 75
C) 95
D) 120

Question

Quizplus · Accepted Answer

The operating cycle is the sum of the average age of inventory and the average collection period. Given the operating cycle is 170 days and the average age of inventory is 145 days, the average collection period is 170 - 145 = 25 days.

A Firm Has an Operating Cycle of 170 Days, an Average