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Mcq 41 BB co Bpp kit

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Mcq 41 BB co Bpp kit

  • This topic has 1 reply, 2 voices, and was last updated 6 years ago by John Moffat.
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  • December 29, 2018 at 5:50 pm #499446
    maxpopper
    Member
    • Topics: 177
    • Replies: 132
    • ☆☆☆

    Sir in this question it is given that
    Following has been calculated for BB co

    Receivable days 58 days
    inventory turnover 10 times
    payable days 45 days
    non current asset days 36 days
    what is the length of cash operating cycle?

    Sir here in order to calculate inventory days they have divided 365 by 10 times which equals to 36.5 days. But from where this formula came?
    I know a formula of inventory turnover which is CGS/avg inventory. But they have not used this formula here and instead have used some other formula of which I am not aware. Can you please explain me?

    December 30, 2018 at 10:12 am #499478
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54701
    • ☆☆☆☆☆

    There are 365 days in a year. Given that the sales are 10 times the inventory then on average the inventory must last for 365/10 days. You do not need a formula for this.

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