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see favonites here, select then and drag to the Favonites Bar folder.Or import from another browser. Import favorites Week 5 Homework Assignment? Help 3 Suppose that Dunn Industries has annual sales of $4.05 million, cost of goods sold of $1,620,000, average inventories of $1,086,000, and average accounts receivable of $720,000. Assume that all of Dunn's sales are on credit. What will be the firm's operating cycle? (Use 365 days a year. Do not round intermediate calculations. Round your final answer to 2 decimal places) points Hint Print O Type here to searchExplanation / Answer
Answer:
Inventory period = 365 ÷ inventory turnover
Inventory turnover = cost of goods sold ÷ average inventory
= $1,620,000 ÷ $ 1,086,000
= 1.49
Inventory period = 365 ÷ 1.49 = 244.9 days
Account receivable period = 365 ÷ receivables turnover
Account receivable turnover = credit sales ÷ average account receivables
= $4. 05 millions ÷ $ 720,000
= 5.625
Account receivable period = 365 ÷ 5.625 = 64.8 days
Operating cycle = inventory period + account receivables period
= 244.9 days + 64.8 days
= 309.7 days (approximately).
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