If a Firm Has a Cash Cycle of 75 Days

question 129

Multiple Choice

If a firm has a cash cycle of 75 days and an operating cycle of 120 days, what is its payables turnover?

• A) 8.11x
• B) 7.19x
• C) 5.97x
• D) 6.73x

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Definitions:

Operating Costs

Expenses associated with the day-to-day functions of a business, excluding the costs associated with producing goods or services.

Days Sales Outstanding

A measure of the average number of days that it takes a company to collect payment after a sale has been made, indicating the effectiveness of a company's credit and collection policies.

Receivables

Money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Sales

The total amount of goods or services sold by a business within a certain period.