On Average,D & M Sells Its Inventory in 37 Days,collects

question 94

Multiple Choice

On average,D & M sells its inventory in 37 days,collects on its receivables in 3.4 days,and takes 35 days to pay for its purchases.What is the length of the firm's operating cycle?

• A)−1.4 days
• B)5.4 days
• C)33.6 days
• D)40.4 days
• E)41.6 days

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Definitions:

Credit Policy

The guidelines a company follows to determine the creditworthiness of its customers and the terms of credit to offer.

Annual Demand

The total quantity of a product or service that consumers in a specific market want to purchase over the course of a year.

Carrying Cost

The total cost of holding inventory, including storage, insurance, taxes, and opportunity cost.

Order Costs

Expenses incurred when ordering and receiving goods, which may include costs related to processing, shipping, and handling.