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Suppose that Trader Joe's had cost of goods sold off $700, 000 in year 2016. Beginning balance of...

Question:

Suppose that Trader Joe's had cost of goods sold off $700, 000 in year 2016. Beginning balance of inventory was $100, 000 and the ending balance of inventory was $200, 000. What is the inventory period?

a. 67 days

b. 78 days

c. 89 days

d. 101 days

Operating Cycle

Operting cycle refers to the number of days that elapse between the purchase of raw materials and the collection of cash from sales.It is calculated as the sum of inventory period and accounts receivable period.

Answer and Explanation: 1

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Answer b. 78 days.

  • Inventory period is the number of days a firm holds its inventory before selling it.
  • It is calculated as:

{eq}Inventory\ period =...

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Operating Cycle & Cash Cycle: Definition & Calculations

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Chapter 17 / Lesson 2
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The operating cycle and cash conversion cycle are both tools to evaluate the timeline of when a business will become profitable. Explore the calculations of each, and identify their importance to a business.


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