he company books reveal the following for Flagler First: Item Beginning Ending Inventory $25,000 $10,000 Accounts Receivable $ 8,000 $ 4,000 Accounts Payable $ 9,000 $ 5,000 Cost of goods sold for the year was $ 90,000 and credit sales were $250,000. Begin by calculating the operating cycle because you can use it in determining the cash cycle.

Step 1: Calculate Inventory Periodo First calculate average Inventory o Next calculate Inventory Turnover o Now calculate Inventory Period

Step 2: Calculate Accounts Receivables Periodo First calculate average receivables o Now calculate receivables turnover o Now you can calculate receivables period Operating cycle = Inventory Period + Accounts Receivable Period Step 3: Calculate Operating Cycle

Cash Cycle = Operating Cycle Accounts Payable Period Step 1 Calculate Payables turnover Step 2 Calculate Accounts Payables period Step 3: Calculate the Cash cycle: Cash Cycle = Operating Cycle Accounts Payable Peri