Suppose that LilyMac Photography has annual sales of $232,000, cost of goods sol

Question

Suppose that LilyMac Photography has annual sales of $232,000, cost of goods sold of $167,000, average inventories of $4,700, and average accounts receivable of $25,200. Assume that all of LilyMac’s sales are on credit.

What will be the firm’s operating cycle? (Use 365 days a year. Do not round intermediate calculations and round your final answer to 2 decimal places.)

Operating Cycle Days ____________

Suppose that LilyMac Photography has annual sales of $232,000, cost of goods sold of $167,000, average inventories of $4,700, and average accounts receivable of $25,200. Assume that all of LilyMac’s sales are on credit.

Explanation / Answer

Operating Cycle Days = Days sales o inventory + Days sale of Outstanding Days sales of inventory = (365 / COGS ) X Average inventory Days sales of inventory =                           365.00 Divide By "/" By COGS = $1,67,000 Equals to =                       0.00219 X "X " By Average Inventory $4,700 Days sales of inventory =                              10.27 Days sales outstanding = 365 / Credit Sales X Average Account receivalbles Days sales outstanding =                         365.00 Divide By "/" By COGS = $2,32,000 Equals to =                       0.00157 X "X " By Average Account receivable $25,200                            39.65 Operating Cycle Days = Days sales o inventory + Days sale of Outstanding Operating Cycle Days = 10.27 + 39.65 Operating Cycle Days = 49.92 Days Answer = 49.92 Days

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