Natcher Corporation's Accounts Receivable at the End of Year 2

question 239

Multiple Choice

Natcher Corporation's accounts receivable at the end of Year 2 was $138,000 and its accounts receivable at the end of Year 1 was $144,000. The company's inventory at the end of Year 2 was $142,000 and its inventory at the end of Year 1 was $133,000. Sales, all on account, amounted to $1,395,000 in Year 2. Cost of goods sold amounted to $813,000 in Year 2. The company's operating cycle for Year 2 is closest to: (Round your intermediate calculations to 1 decimal place.)

• A) 46.8 days
• B) 71.8 days
• C) 67.8 days
• D) 98.8 days

---

Definitions:

Payback Criterion

A capital budgeting method that measures the time required to recoup the initial investment in a project.

Mutually Exclusive

Referring to events or choices that cannot occur or be taken simultaneously; selecting one option excludes the availability or selection of the other.

Payback Cutoff

The maximum acceptable period within which an investment should recover its initial costs, used as a criterion for investment decisions.

Net Present Values

The calculation of the present value of an investment's expected cash flows minus the initial investment cost.