Question

Jerome Industries has inventory days of 48, accounts receivable days of 21, and accounts payable days of 30. What is the length of its cash cycle

Answer 1

39 days

Step-by-step explanation:

Data provided:

Inventory days = 48

Accounts receivable days = 21

Accounts payable days = 30

now,

the length of the cash cycle is calculated as:

= Inventory days + Average collection days - Accounts Payable period

on substituting the respective values, we get

The length of the cash cycle = 48 + 21 - 30

or

The length of the cash cycle = 39 days