Suppose that Sam Industries has annual sales of $2 million, cost of goods sold of $950,000, average inventories of $45,000, and average accounts receivable of $90,000. Assuming that all of Sam's sales are on credit, what will be the firm's operating cycle?

34 days

Explanation:

Formula

The Operating Cycle formula is as follows:  

Operating Cycle  =  Inventory Period + Accounts Receivable Period

Inventory Period  =  365 / Inventory Turnover

Where the formula for Inventory Turnover is:  

Inventory Turnover  =  Cost of Goods Sold / Average Inventory

The Accounts Receivable Period is calculated as follows:

Accounts Receivable Period  =  365 / Receivables Turnover  

Where the formula for Receivables Turnover is:

Receivables Turnover = Credit Sales / Average Accounts Receivable

Therefore, the detailed formula for Operating Cycle is:  

365 / (Cost of Goods Sold / Average Inventory) + 365 /(Credit Sales / Average Accounts Receivable)

Operating Cycle = [365 / (950,000/45,000) + 365 / (2,000,000/90,000)]

Operating Cycle = 17.3 + 16.43 which 33.73 days approximately 34 days

answer; ///i believe that the correct answer is ( inductive check first good

the most important factor in the

work process or industry is to retain the interest of the employee. and to

retain them, their salary or profit must be adjusted to the best value. unless

the employee does not do his job properly, employees must receive bonuses or

benefits to ensure them to stay in the company. it will actually make them stay

longer, make them feel important and reduce costs for hiring new employees.

explanation:

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