Consider the following financial statement information [ Operating Cycle Cash Cycle]

Excel File

Consider the following financial statement information for the Bull dog  Corporation:
Item Beginning Ending
Inventory $6,521 $8,319
Accounts receivable 4,226 4,787
Accounts payable 6,291 7,100

                Net Sales $62,311
Cost of goods sold 50,625


A) What is the Operating Cycle?

Operating Cycle = Inventory Period + Receivables Period
Inventory Period = 365/Inventory Turnover
Inventory Turnover = Cost of Goods Sold / Average Inventory
Receivables Period = 365/Receivables Turnover
Receivables Turnover = Sales / Average Receivables
 

Inventory Turnover 6.82
Inventory Period 53.50
Receivables Turnover 13.82691668
Receivables Period 26.39778691
Operating Cycle 79.895


B) What is the cash cycle?

Cash cycle = Operating Cycle - Payables Period
Payables period = 365/Payables Turnover
Payables Turnover = COGS/Avgerage Payables

Average Payables 6,696
Payables Turnover 7.561048465
Payables Period 48.2737284
Cash Cycle 31.621