The Following Company Information Is Available What Is the Company's Operating Cycle (In Days)? (Assume All

question 72

Multiple Choice

The following company information is available: $$\begin{array} { | l | r | } \hline \text { Average accounts receivable } & \$ 700,000 \\\hline \text { Average inventories } & 140,000 \\\hline \text { Average accounts payable } & 130,000 \\\hline \text { Net sales } & 1,000,000 \\\hline \text { Cost of goods sold } & 1,600,000 \\\hline \text { Purchases } & 1,160,000 \\\hline\end{array}$$
What is the company's operating cycle (in days) ? (Assume all sales are made on credit. Round your answer to the nearest day.)

• A) 256 days
• B) 32 days
• C) 287 days
• D) 47 days

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Definitions:

Adverse Selection

A situation where sellers have information that buyers do not, or vice versa, leading to transactions that benefit the more informed party.

Death Spiral

A term often used in insurance and pricing strategies to describe a situation where pricing adjustments lead to reduced participation or purchase, necessitating further price increases, and thus accelerating a decline in demand or viability.

Health Insurance

A type of insurance coverage that pays for medical and surgical expenses incurred by the insured as a part of a health care system.

Premiums

Payments made regularly to an insurance company or the additional amount above the normal price.