Question

using the information below compute the cycle efficiencyDays' sales in accounts receivable 15daysDays' sales in inventory 72daysDays' payable outstanding 35days (A) 51 days.(B) 87 days.(C) 37 days.(D) 52 days.(E) O 63 days.

Answer 1

Answer:

(D) 52 days

Explanation:

Cycle efficiency Days considers the number of days required for the receipt of cash for current assets less the number of days to settle current liabilities.

From the information given,

Current asset days include;

Accounts receivable days = 15

Sales in inventory = 72

Payable outstanding days = 35

Cycle efficiency Days = 72 + 15 - 35

                                    = 52 days

The right option is (D).

Answer 2

Answer:

The correct answer is (D) 52 days.

Explanation:

The cycle efficiency is calculated by subtracting the number of days in which payment is to be made to raw material supplier from the total days in which cash is to received from customers. So for this purpose we will add sales day and recivables day and than subtract payables day from it.

cycle efficiencyDays= 72+15-35 = 52

It took 87 days to make sales and collect cash.