Question

The following computations were made from Clay Co.'s current-year-end books:Number of days' sales in inventory 61Number of days' sales in trade accounts receivable 33What was the number of days in Clay's current-year operating cycle?A. 33B. 47C. 61D. 94

Answer 1

Answer: 94 DAYS

Explanation: The average time it takes for the business to complete the whole process of making initial cash outflow to produce goods and receiving cash from customers by selling those goods produced is called operating cycle of that business.

formula = number of days of inventory + number of days in accounts receivable

therefore,

operating cycle = 61 days + 33 days = 94 days