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Chapter 20
Question 2
Cash operating cycle
A company has provided the following information:
Raw material inventory holding period 25 days
Payables payment period 40 days
Production period (WIP) 5 days
Finished goods holding period 15 days
Receivables collection period 66 days
Calculate the length of the cash operating cycle.
Cash cycle = 25 – 40 + 5 + 15 + 66 = 71 days
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