Question

Consider the following financial statement information for the Stream Corporation.

   

Item
Inventory
Accounts receivable Accounts payable

Net Sales
Cost of Goods Sold

Beginning $17,385 13,182 15,385

Ending $19,108 13,973 16,676

                 

$216,384 165, 763

      

1. Calculate the operating and cash cycles. (Note: Use average inventory, average accounts receivable and average accounts payable in computing the inventory period, accounts receivable period, and accounts payable period, respectively).

2. Interpret the meaning of the operating and cash cycles that you computed in (a)

Answer 1