Question

ABC Corporation currently has an inventory turnover of 24.11, a payables turnover of 12.9, and a receivables turnover of 15.4. How many days are in the cash cycle?

Answer 1

Cash Cycle = Operating Cycle - Payable Period

= 38.84- 28.29457364

= 10.55

Hence the correct answer is 10.55

Note:

Inventory Period = Number of Years in a Year / Inventory Turnover

= 365/ 24.11

= 15.1389465

Receivables Period = Number of Days in a year / Receivables Turnover

= 365 / 15.4

= 23.70

Operating Cycle = Inventory Period + Receivables Period

= 15.1389465 + 23.70

= 38.84

Payable Period = Number of Days in a Year / Payable Turnover

= 365 / 12.9

= 28.29457364