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Basic Question 4 of 12
On May 15, your firm receives 20 cases of designer pens. On June 30, your firm pays $3,250 for the pens. On July 15, the pens are sold on credit for $10,500. On September 10, your firm collects the receivable in full. If each transaction occurs at the end of the business day, how many days are in the operating cycle?
B. 57 days
C. 61 days
D. 72 days
E. 118 days
A. 46 days
B. 57 days
C. 61 days
D. 72 days
E. 118 days
User Contributed Comments 10
| User | Comment |
|---|---|
| rfvo | Yeah, right. |
| Eforrest | could you explain please? |
| azramirza | count from may 16 till sept 10=118 days |
| DonAnd | Operating Cycle = # dys of inventory + # dys of receivables |
| gill15 | what rtvo said....but as Dr. Evil would say it... Riggghhht.... |
| schweitzdm | How do you do this problem when you aren't given the average accounts receivable? |
| Teeto | It is the number of days passed since the pens are received (15 May) till they ares sold and cash is collected (September 10). The question enhances understanding of the topic a lot. |
| khalifa92 | what would the net operating cycle be? |
| MathLoser | Hey guys, just in case you don't know how to count the date. Use your calculator TI BA 2 + Let's calculate the number of days of inventory: 1/ [2ND] [1] (Date) 2/ DT1 = 5 [.]1519 . It will return 05-15-2019. If you are not familiar with this format, change your date format to EUR in [2ND] [.] (Format) 3/ DT2 = 7[.]1519. It will return 07-15-2019 4/ [CPT] BDB = 61 That's our answer. If there are only 360 days, press the arrow until you see ACT. [2ND][ENTER] (Set) it to 360. |
| walterli | count days for inventory: 61 for account receivable collection: 57 Operating cycle: 61+57=118 |
I used your notes and passed ... highly recommended!
Lauren
Learning Outcome Statements
explain the cash conversion cycle and compare issuers' cash conversion cycles
CFA® 2024 Level I Curriculum, Volume 2, Module 4.