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John Moffat.
John Moffat.-
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maxpopper
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Sir in this question it is given that
Following has been calculated for BB coReceivable 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?
John Moffat
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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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