Question

The company currently has an operating cycle of 76.4 days. The company is implementing some operational changes that are expected to increase the accounts receivable period by 2.2 days, decrease the inventory period by 5.3 days, and increase the accounts payable period by 1.5 days. What is expected to be the new operating cycle

Answer 1

73.3 days

Step-by-step explanation:

Calculation for what is expected to be the new operating cycle

Using this formula

Operating cycle = (Current operating system+Expected increase accounts receivable period)-Decrease in inventory period

Let plug in the formula

Operating cycle =(76.4 days+2.2 days)-5.3 days

Operating cycle=78.6 days-5.3days

Operating cycle=73.3days

Therefore what is expected to be the new operating cycle will be 73.3 days