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A Firm Has an Average Age of Inventory of 60

question 98

Multiple Choice

A firm has an average age of inventory of 60 days, an average collection period of 45 days, and an average payment period of 30 days. The firm's operating cycle is ________ days.


Definitions:

Compounded Semi-Annually

The process of calculating interest on a principal sum and its accumulated interest at two intervals within the year.

Effective Annual Rate

The interest rate on a loan or financial product restated from a nominal rate to an annual rate, taking compounding into account.

Compounded Daily

The process where interest is calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan, on a daily basis.

Compounded Semi-Annually

Interest calculated twice a year on the initial principal and the interest that has been previously accumulated.

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