Respuesta :
Answer:
The operating and cash cycles are 62.99 days and 37.92 days respectively
Explanation:
The computation of the operating and the cash cycle is shown below:
The operating cycle = Days inventory outstanding + days sale outstanding
where,
Day inventory outstanding = (Beginning inventory + ending inventory) ÷ 2 ÷ cost of goods sold × number of days in a year
= ($7,203 + $9,041) ÷ 2 ÷ $59,814 × 365 days
= ($8,122÷ $59,814) × 365 days
= 49.56 days
Day sale outstanding = (Beginning Accounts receivable + ending Accounts receivable) ÷ 2 ÷ Net sales × number of days in a year
= ($3,069 + $3,995) ÷ 2 ÷ $95,982 × 365 days
= ($3,532 ÷ $95,982) × 365 days
= 13.43 days
Now put these days to the above formula
So, the days would equal to
= 49.56 days + 13.43 days
= 62.99 days
Now The cash cycle = Days inventory outstanding + days sale outstanding - days payable outstanding
where,
Day payable outstanding = (Beginning Accounts payable + ending Accounts payable) ÷ 2 ÷ cost of goods sold × number of days in a year
= ($3,617 + $4,599) ÷ 2 ÷ $59,814 × 365 days
= ($4,108 ÷ $59,814) × 365 days
= 25.07 days
Now put these days to the above formula
So, the days would equal to
= 49.56 days + 13.43 days
- 25.07 days
= 37.92 days
