Suppose that Dunn Industries has annual sales of $4.05 million, cost of goods so

Question

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.)

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.

Explanation / Answer

Operating Cycle = [(365/1620000)*1086000] + [(365/4050000)*720000]

= (244.6852+64.8889)

= 309.6 days

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