Question

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.

Answer 1

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