eagles_dare13

This is my take...

Remember operating cycle is the measure of time needed to convert raw materials into cash from customers.

You are looking back over the past year at what the company did to generate business.

If you were to take the average it will make the operating cycle seem shorter b/c you are accounting for $150M less in inventory this would then lead you to conclude that the company has greater ability to generating cash.

That should directly feed into #3. Use the new numbers and subtract # days or payables.

Don't forget: Purchases = COGS + End Inv - Beg Inv



Edited 1 time(s). Last edit at Tuesday, February 16, 2010 at 03:26PM by The Jon B.