Suppose that Tucker Industries has annual sales of $6.50 million, cost of goods sold of $2.93...
Question:
Suppose that Tucker Industries has annual sales of $6.50 million, cost of goods sold of $2.93 million, average inventories of $1,200,000, and average accounts receivable of $650,000. Assuming that all of Tucker's sales are on credit, what will be the firm's operating cycle?
Average Inventories:
Average inventories refer to the addition of opening balance and closing balance of inventory divided by 2. Inventories are inclusive of the work-in-progress, raw components, and the finished commodity. These are classified as current assets.
Answer and Explanation: 1
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View this answer{eq}\begin{align*} {\rm\text{Operating cycle}}\, &= \,{\rm\text{Days inventory outstanding}}\, + \,{\rm\text{Days sales outstanding}}\\ &=...
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Operating Cycle in Accounting: Definition & Formula
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Chapter 22 / Lesson 42
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Explore the operating cycle in accounting. See the operating cycle definition and understand how to calculate the operating cycle. Find the operating cycle formula.
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