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Computation of the Operating Cycle

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Here as Apples Ratios for 2010:
Asset Turnover - 1.1
Inventory - 52.5
Days in Inventory - 7
A/R Turnover - 7.35
Days in Receivable - 50
Accounts Payable Turnover - 2.9
Days in Payable - 126
Operating Cycle - (69)

Can the operating cycle be negative?

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Solution Summary

This solution illustrates how to compute the operating cycle and how to interpret each component of that computation.

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Your computations are correct. The fact is that Apple has turned the typical operating cycle on its head. Generally, a business buys inventory, usually paying for it anytime between immediately and 30 ...

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