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When doing the BPP FM practice Question 82( section C question), in question part ai) it asked for the cash operating cycle which will need the account payable period to be calculated.
I used the accounts payable divided by the forecasted credit purchase, of 2,500,000, but the answer is to divide by the forecasted cost of sales, of 2,100,000.
Isn’t that we only use the cost of sale to calculate the accounts payable period when the credit purchase is not available? Why in this case answer uses cost of sales instead of credit purchase to calculate?
Moreover in the formula sheet given in the BPP workbook it also states that AP period = AP/Credit purchase x 365 days.
Seeking your response,