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Operating cycle and cash conversion cycle

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Solution Summary

This explains the steps to compute operating cycle and cash conversion cycle

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Payables Deferral Period
Accounts Payable
Cost of Sales/360
= Payables Deferral Period (days) 40 = $750,000. / $18,611.11

Inventory Conversion Period
Average Inventory
Cost of Sales/360
= Inventory Conversion Period (days) 113 = $2,100,000. / ...

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