Operating cycle: Stamp Ltd has an operating cycle of 81 days and takes 47 days to collect on its receivables. What is its level of inventory if the company's cost of sales is $312,455? Round to the nearest dollar.
A) $9,190
B) $14,685
C) $29,105
D) $69,339

Question

Quizplus · Accepted Answer

The level of inventory is calculated as follows:Inventory = (Cost of sales / 365 days) * Operating cycle - Receivables collection periodInventory = ($312,455 / 365 days) * 81 days - 47 daysInventory = $29,105

Operating Cycle: Stamp Ltd Has an Operating Cycle of 81