For a Company That Takes an Average of 50 Days

question 104

Essay

For a company that takes an average of 50 days to sell inventory,takes an average of 110 days to collect for its sales,and has payment terms of 45 days on its purchases,what is the financing period? Show calculations.

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Definitions:

MCE

Manufacturing Cycle Efficiency, a metric measuring the proportion of production time that is value-added.

Net Operating Income

Income from operations after deducting operating expenses but before interest and taxes.

Operating Assets

Assets utilized in the daily operations of a business to generate revenue, such as equipment, machinery, and buildings.

Minimum Required Rate of Return

The lowest acceptable return on an investment, determined by the investor's objectives, risks, and opportunities.