Calculate the Operating Cash Cycle If the Inventory Turnover Period

question 21

Multiple Choice

Calculate the operating cash cycle if the inventory turnover period is 21 days, the debtor's turnover period is 37 days and the creditor turnover period is 40 days.

• A)93 days.
• B)-18 days.
• C)18 days.
• D)53 days.

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Definitions:

Return on Investment

A measure of the profitability of an investment, calculated as the net gain from an investment divided by the cost of the investment.

Average Operating Assets

The average value of the assets utilized to generate revenue during a specific period, often calculated by averaging the beginning and ending asset values for the period.

Stockholders' Equity

The equity held by shareholders in a company, calculated as the company's assets minus its outstanding debts, representing their residual ownership.

Net Operating Income

A measure of a company's profitability from its regular business operations, excluding deductions of taxes and interest expenses.