标题: Operating cycle ? and confuse in Curriculum book [打印本页] 作者: whew1110 时间: 2011-7-13 15:13 标题: Operating cycle ? and confuse in Curriculum book
CFA Curriculum Vol 4 Page 218 Question 2
Credit sale 25,000
COGS 20,000
Account receivable 2,500
Inventory BEG balance 2,000
Inventory END balance 2,300
Account payable 1,700
Question abt Operating cycle
My solution
Inventory turnover = COGS / Average inventory = 20,000/[(2500+2000)/2] =8.889
Number of day inventory = 365/ inventory turnover = 41 days
Receivable turnover = Credit sale / Average receivable =25000/2500=10
number of day Receivable =365/Receivable turnover= 365/10=36.5 days
==> Operating cycle = number of day Receivable + number of day inventory= 36.5+ 41 =77.56
But They give possible answer
A 42.0
B.47.9
C.78.5
in stead of calculate
Inventory turnover = COGS / Average inventory
they calculate
Inventory turnover = COGS / Ending balance inventory
My question is when and why they calculate with Ending balance inventory and average inventory ?作者: JRossSter 时间: 2011-7-13 15:13
According to Schweser, you should always use average balance if two periods' data are given. If not, then use ending balance of corresponding period.作者: Finalnub 时间: 2011-7-13 15:13
Isn't the Operating cycle = number of day Receivable + number of day inventory - number of days payable?作者: ftwcfa 时间: 2011-7-13 15:13
Net Operating cycle(Cash Conversion Cycle) = number of day Receivable + number of day inventory - number of days payable作者: Kiakaha 时间: 2011-7-13 15:13
I definitely encountered this same question and was a bit confused. Schweser does tell you to use the averages which ends up giving you a calculation of roughly 77.56 which is close to Answer C. Knowing how to calculate the answer both ways should help. I find it unlikely that the CFAI would try to trap you on this type of question as you can see the other 2 answers are dramatically different. What they are really try to trick you on here is whether you know the difference between the operating cycle and the cash conversion cycle, where the operating cycle excludes days payable outstanding.作者: dcfox83 时间: 2011-7-13 15:13
lol, i encountered this question last night, and according to elan books, it shoud be the average inventory. so i was confused as well that they just consider the EI and didnt use the BI作者: chetan86 时间: 2011-7-13 15:13
adq123: operating cycle is just DOH + DOS...you formula is the net operating cycle
