Hi,

Can you please explain where the numbers that are circled come from? Is that a result of a calculation or an example, as in any number of net sales and cost of goods could be inserted in to calculate the operating Cycle?

Item Inventory Accounts Receivable Accounts Pavable Net Sales Cost of Goods Sold Beginning Balance Ending Balance Average $ 2,300,000.00 $ 3,500,000.00 $ 2,900,000.00 $ 1,750,000.00 $ 2,300,000.00 $ 2,025,000.00 $ 700,000.00 $ 900,000.00 $ 800,000.00 $ 13,000,000.00 $ 8,500,000.00 Calculating the OC with the data provided above: . Inventory Turnover: $8,500,000 / $2,900,000 = 2.931 Inventory Period: 365 / 2.931 = 124.53 . Receivables Turnover: $13,000,000 / $2,025,000 = 6.419 . Accounts Receivable Period: 365 / 6.419 = 56.862