Louie Corporation Has Provided the Following Data The Company's Operating Cycle for Year 2 Is Closest To

question 101

Multiple Choice

Louie Corporation has provided the following data: $$\begin{array} { | l | r | r | } \hline & \text { Y ear 2 } & \text { Year 1 } \\\hline \text { Accounts receivable } & \$ 269,000 & \$ 290,000 \\\hline \text { Inventory } & \$ 190,000 & \$ 160,000 \\\hline \text { Sales, on account } & \$ 1,340,000 & \\\hline \text { Cost of goods sold } & \$ 860,000 & \\\hline\end{array}$$ The company's operating cycle for Year 2 is closest to:

• A)81.0 days
• B)150.5 days
• C)79.2 days
• D)9.7 days

---

Definitions:

Credit Period

The duration of time a buyer has to pay a supplier for purchases without incurring interest or penalties.

Perishable

A perishable item is one that has a limited lifespan and can deteriorate or expire, often food, flowers, or medicine.

Buyer's Inventory

The stock of goods a purchaser has on hand, which represents a current asset on the balance sheet that is intended for resale or use in production.

Credit Terms

The conditions, including payment timing and interest, under which credit will be extended to a borrower.