CAF-7 · Chapter 12 · Question 1 of 15
What is the standard formula used to calculate a company's Cash Operating Cycle?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Inventory Days + Trade Receivable Days - Trade Payable Days
Explanation
The cash operating cycle measures the time between paying cash for inventory and receiving cash from customers. It is calculated by adding inventory holding days and receivable collection days, and then subtracting the payable deferral days.
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