Consider the following financial statement information for the Amaryliss Corporation: Item Beginning Ending Inventory $10,382 $11,180 Accounts receivable 5,651 6,181 Accounts payable 5,952 6,293 Net sales $139,303 Cost of goods sold 87,113 Assume all sales are on credit. Calculate the operating and cash cycles

60.67 days and 35.02 days

Explanation:

The computation of the operating and cash cycles is shown below:

The operating cycle = Days inventory outstanding + days sale outstanding

where,

Day inventory outstanding = (Beginning inventory + ending inventory) ÷ 2 ÷ cost of goods sold × number of days in a year

= ($10,382 + $11,180) ÷ $87,113 × 365 days

= ($10,782 ÷ $87,113) × 365 days

= 45.17 days

Day sale outstanding = (Beginning Accounts receivable + ending Accounts receivable) ÷ 2 ÷ Net sales × number of days in a year

= ($5,651 + $6,181) ÷ 2 ÷ $139,303 × 365 days

= ($5,916 ÷ $139,303) × 365 days

= 15.50 days

Now put these days to the above formula  

So, the days would equal to

= 45.17 days + 15.50 days

= 60.67 days

Now The cash cycle = Days inventory outstanding + days sale outstanding - days payable outstanding  

where,  

Day payable outstanding = (Beginning Accounts payable + ending Accounts payable) ÷ 2 ÷ cost of goods sold × number of days in a year

= ($5,952 + $6,293) ÷ $87,113 × 365 days

= ($6122.50 ÷ $87,113) × 365 days

= 25.65 days

Now put these days to the above formula  

So, the days would equal to

= 45.17 days + 15.50 days - 25.65 days

= 35.02 days

1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

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