Number of days of inventory = $2,300/($20,000/365) = 41.975 days
Number of days of receivables = $2,500/($25,000/365) = 36.5 days
Operating cycle = 41.975 + 36.5 days = 78.475 days
Note: The net operating cycle is 47.9 days.
Purchases = $20,000 + $2，300 - $2，000 = $20,300
Number of days of payables = $1,700/($20,300/365) = 30.567 days
The net operating cycle is 78.475 - 30.567 = 47.908 days
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The operating cycle for this company is closest to:
