A firm has a cash conversion cycle of 80 days, an average collection period of 25 days, and an average age of inventory of 70 days. Its operating cycle is ________ days.

Question

asked Jan 15, 2021 125k views

1 Answer

Depling · Answer 1 · 2021-01-20T20:23:29+0000

Answer: 95 days

Explanation:

Cash conversion cycle = 80 days

Average collection period = 25 days

Average age of inventory = 70 days

Then, operating cycle will be:

= Average collection period + Average age of inventory

= 25 days + 70 days

= 95 days