A company’s sales revenue for the year just ended

Question

1.7 A company’s sales revenue for the year just ended was $28 million. The company earned a gross margin of 40% on sales. All sales and purchases were on credit.

The following balances have been extracted from the year end accounts:

Inventory $4 million

Accounts receivable $6 million

Accounts payable $3 million

Required:

Calculate, to the nearest day, the company’s cash operating cycle based on the year end figures.

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