Ferry's Furniture Outlet has an accounts receivable period of 48.32 days and an accounts payable period of 32.15 days. The company turns over its inventory 4.85 times per year. What is the length of the company's operating cycle

Cash operating cycle = 91.5 days

Explanation:

Cash operating cycle is the average length of time between when a business makes payment for purchases and when cash is received from customers in respect to sales made. The shorter the better

Cash operating cycle = Inventory days + receivables days - payable days

The inventory turnover in days = 365 days / inventory turnover in times

= 365/4.85 times

= 75.3 days

Cash operating cycle = Inventory days + receivables days - payable days

= 75.3 days + 48.32 days - 32.15 days = 91.47

Cash operating cycle = 91.5 days